GMS: Ship Recycling Market Contracts Amid Weak Steel Prices and Currency Pressure
GMS: Ship Recycling Market Contracts Amid Weak Steel Prices and Currency Pressure
Global ship recycling markets are navigating yet another challenging week as 2025 draws to a close, according to the GMS Weekly Podcast – Forums and Frictions (Week 47) update. Deteriorating macroeconomic indicators combined with regional imbalances are exerting marked pressure on recycling hubs in South Asia and Turkey. GMS (Global Marketing Systems), one of the world's largest ship recycling brokers, reports that weakening steel prices, currency fluctuations, sanctions-related risks, and constrained tonnage supply are creating a squeeze on the market.
As the final week of November approaches, oil futures have retreated to approximately USD 57.7, signaling declines both over the past month and year-to-date. The freight market remains active in certain segments but continues to trade well below last year's levels. Notably, steel plate prices are declining in Bangladesh and Pakistan, putting pressure on recycling facility margins.
Currency volatility in India and Bangladesh is eroding purchasing power among recycling buyers. Meanwhile, additional sanctions on Russia and Iran assets imposed by the US and EU are intensifying scrutiny of the dark fleet. This development threatens not only short-term trading but also has the potential to affect long-term recycling flows.
The report highlights signals that global indicators will not soon turn in favor of recycling markets. The Baltic Dry Index shows weekly gains in certain segments but remains approximately 9% below its 30-day average and roughly 50% lower compared to November 2024. The 20th sanctions package prepared by the EU contains measures that could allow member state naval forces to intercept suspicious shadow-fleet vessels. The US has imposed additional restrictions on approximately 170 Iran-linked vessels. These pressures are narrowing the commercial scope for older tonnage and beginning to create conditions that could accelerate recycling intentions.
Bangladesh remains the region's strongest market by pricing: USD 410 / LDT (bulk), USD 430 (tanker), USD 440 (container). However, transaction volumes are limited; 2025 has been described as "anorexic." Inflation hovers in the 8–9% band, while the Taka has weakened to BDT 122.5 per USD. Local steel plate prices have fallen to USD 525.9, intensifying pressure on recycling facilities. Pre-election political tensions also create operational risk. On a positive note, another facility obtained Hong Kong Convention (HKC) certification, bringing the total to 20 facilities.
India – Alang presents a more challenging picture. The market is described in the report as "losing bigly"; buyers are backing away from firm offers. The Rupee has weakened 1% in a week to Rs 89.6 / USD, reducing forward pricing confidence. While steel prices have risen to USD 398, they remain below the critical USD 400 band. Small and lower-quality tonnage, despite being offered at USD 400 / LDT indications, is finding buyers at lower levels. The market is being dragged into a two-tiered price structure due to discounted dark-fleet tonnage and cheap imported steel. On HKC compliance, the presence of only one vessel in port and no new deals pose risks.
Pakistan – Gadani demonstrated the region's most critical structural development during the week. The country's first HKC-compliant yard is reportedly nearing final approval. Other facilities are expected to gain approval within 3–6 months. In the near term, however, fundamentals remain pressured: steel plate prices have fallen to USD 586, the PKR has experienced mild depreciation at 282.6 /USD, and tonnage arrivals have been minimal for a third consecutive week.
Turkey – Aliaga market remains steady. Prices are holding firm: USD 260 / LDT (bulk), USD 270 (tanker), USD 280 (container). The Lira, having weakened to 42.4 / USD, combined with sluggish steel demand, is pushing facilities to operate at reduced capacity.
The overall picture for South Asia and Turkey is characterized by weak tonnage flows, flat or declining steel prices, weakening local currencies, and intensifying sanctions scrutiny. Conversely, HKC progress in Bangladesh and Pakistan holds potential for establishing a more sustainable recycling cycle beyond 2026. However, the sector's trajectory will depend both on how dark fleet pressures unfold and on how much freight markets recover in 2026.
Key Points:
The global recycling market is under pressure from weak steel prices and currency volatility.
EU and US sanctions are tightening scrutiny of the shadow fleet.
Bangladesh maintains its position as the price leader but transaction volumes remain low.
In India–Alang, currency weakness and two-tiered pricing create risks.
Pakistan is entering a structural transformation phase with approval of its first HKC-compliant facility.
Turkey–Aliaga shows flat prices and demand.
The 2026 outlook hinges on how tonnage flows are affected by sanctions and freight market recovery.
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News Link: https://en.portnews.ru/news/384947/
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Author: SedatOnat.com
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