Another deplorable week of falling sentiment has left all major global ship recycling markets reeling as the industry heads into summer/monsoon months in the subcontinent. Moreover, it seems doubtful (at this time) that more notable deals will be struck, especially with the industry in such a state of disarray.
Currency depreciation and plunging steel plate prices (particularly in Pakistan this week alone) have left nearly all major recycling markets facing price declines close to $100/LDT from highs of over of $700/LDT (and nearly $500/MT in Turkey) seen a few weeks ago.
As a result, cash buyers with inventory to sell or ship owners looking for new deals are unlikely to be willing to take this hit and may prefer to trade their ships a bit further, especially with freight markets which are now beginning to improve.
A lack of supply could see recyclers across the subcontinent return to the table, and the past few months have been generally calmer in terms of new applicants, as the improving freight sector and ongoing holidays (including the holy month of Ramadan) began to tell.
However, at this stage, it is impossible to say where the bottom of the market is, because once prices start to drop at major recycling sites, they tend to drop like a rock and owners would be strongly advised not to to pursue a deal. which seems to be reaching new lows with each passing day.
According to GMS, it would be best to instead watch market moves and wait for some stability/positivity to return before plunging back to these new levels wherever they end – bearing in mind that there are This is an industry that has almost tripled from the previous few years and some form of error correction has always been on the books because what goes up eventually comes down.