AGM Week 03 – TUMBLING DICE!

As President Trump’s inauguration and tariff increases loom, President Biden’s relentless efforts Efforts to reach a ceasefire agreement in Gaza finally bore fruit this week with the release of the first Israeli hostages marking their return home. The ceasefire could also reduce attacks on commercial vessels crossing the Red Sea shipping lanes and resume the regular flow of maritime traffic in the region, helping to ease global inflation and as the 2024 economic crisis still hits the ship recycling industry. As the oil market strengthened further this week, closing at nearly USD 77.80/barrel, the pressure resulting from recent sanctions on Chinese shipping companies/dark fleet is slowly starting to show its effect. What will likely make matters worse is the planned interest rate cut by the US Federal Reserve as domestic inflation continues to decline and the US Dollar continues to put pressure on the country’s recyclable currencies, as almost all countries reported declines this week, with the Bangladeshi Taka taking over. the lion’s share of this week’s depreciation pie. Even the Baltic Shipping Index has reported an overall downward trend in almost all sectors, causing the dry bulk market to close the following week with a decline of almost 6%. As predicted in previous weeks and based on the trajectory of charter rates through the end of 2024 and even into 2025, the ship recycling market will continue to enjoy healthier Q1 ship introductions, as individual ports welcome new arrivals in both India. and Bangladesh week after week, even highlighting 48 thousand LDT recycling tonnage at both ports.

However, in line with the global economic backlash, ship recycling destinations have experienced a worrying reversal in ship prices of late, mainly due to weakening currencies, depressed sentiment and an overall drop in steel plate prices, for the first time in a long time . , strengthened overall except in Türkiye and Bangladesh (which remained at the top of the market rankings). As ship supply begins to increase after 2024 was set to be the lowest year for recycling volumes in more than a decade, the exit of aging ships from the operating fleet continues to be delayed due to the extraordinary performance of the freight market during the first 3 Quarters of 2024 Given that most of these units likely started being chartered at the turn of the year, a number of dry bulk vessels (mostly Panamax) built in the 90s suddenly went up for sale at the same time, mainly from Chinese vessels. Business owners are looking to tie up loose ends ahead of the Chinese New Year holiday, and this increase in supply has put adverse pressure on sub-continent markets, as demand remains limited due to collapsing fundamentals. Therefore, ship deals started to falter again. Bangladesh was the country most affected this year, with ship prices dropping by USD 30/LDT over several weeks. And recyclers looking to negotiate and fill inactive lots can now get cheaper tonnage in the near future. While most of the ship supply comes from vintage bulk carriers and there are even a few LNG carriers in sight, tankers and containers are still plentiful and will likely arrive at various stages throughout the year. The question of what to do with the old/eventually damaged tankers on Biden’s recent sanctions list when they are finally sold remains unclear. For now, the overall outlook for ship recycling once again looks uncertain, especially as shipowners consistently seek to achieve the next highest sale price and ever-eager cash buyers remain eager to please, driving up prices rather than enjoying the present.

For Week 3 of 2025, the GMS Market Ranking/ship indications are as follows.