The ship recycling market may shift from a tonnage shortage to a capacity crunch if Iran sanctions ease and Red Sea transits resume.
The ship recycling market could move from a shortage of end-of-life tonnage to a capacity crunch if sanctions on Iran ease and Red Sea transits resume, reported UK's Seatrade Maritime News.
Hitesh Vyas, vice president of Middle East operations and green recycling coordinator at Wirana Shipping, stated that limited supply has kept competition high among buyers and yards. Older LNG steam turbine vessels, once prime candidates for recycling, have remained in service as market conditions improved.
Mr. Vyas noted that cash buyers are competing aggressively for the few ships available. He warned that prices could fall sharply if sanctions on Iran are lifted, allowing more vessels to enter the recycling market. A return to the Red Sea route for Asia-Europe services could also trigger a wave of containership recycling.
He added that tanker markets may see dark fleet units scrapped if Iranian oil returns to compliant fleets. Wirana stressed that it does not buy sanctioned vessels and urged for streamlined processes to ensure payments are not blocked when sanctions change.
Yard capacity could become a constraint if supply rises, with recycling taking three to five months for an average ship and up to a year for a Very Large Crude Carrier (VLCC). Facilities in Pakistan and Bangladesh may seek Hong Kong Convention certification if demand grows, but this could take one to two years.
Turkey has gained a larger share of recycling due to OECD rules restricting end-of-life ships from leaving OECD waters. Mr. Vyas advised owners to prepare early by building inventories of hazardous materials and securing agreements with buyers and yards.
He emphasized that owners should act now rather than wait for market shifts, as current conditions allow vessels to be sold without liquidity pressures. A gradual flow of ships is expected, avoiding a sudden rush to dispose of assets.
