The inflation monster, falling freight rates, and excess supply in the oil market have hit the shipbreaking sector. According to a report by MarineLink based on GMS data, scrap prices, which reached $600 at the beginning of 2024, are signaling alarm as they are projected to drop below the $400 mark by the end of 2025.
The inflation monster, falling freight rates, and the oversupply in the oil market have hit the ship recycling sector. According to a report by MarineLink based on GMS data, scrap prices that reached $600 at the beginning of 2024 are signaling alarm as they are projected to fall below the $400 threshold by the end of 2025.
The report for week 50 of 2025 published by GMS, a leading cash buyer in the world, and reported by MarineLink, revealed a grim picture in the ship recycling markets. According to the report, the sector is experiencing a challenging year-end under the pressure of rising inflation, plummeting steel prices, and a strong US Dollar fueled by the wreckage of 2025.
The sector's benchmark index, the Baltic Dry Index (BDI), has dropped to its lowest level in the past month with a 4% loss. Notably, the 5.6% decrease in Capesize tonnage and the 2.1% drop in Panamax have triggered stagnation in the market.
Another surprising development occurred on the oil side. While the expectation was for prices to be around $60 per barrel, they fell by over 3% to $57.61. The International Energy Agency's (IEA) warning of a "record oversupply" accelerated the decline in oil prices, which in turn has lowered local steel plate prices.
According to data reported by MarineLink, the markets of the Indian Subcontinent (India, Pakistan, Bangladesh) are showing the worst performance in recent years. Scrap prices that reached $600 per ton (LDT) in January 2024 have now dipped below $400 across all regions as we approach 2026.
Another noteworthy detail in the report is the status of "Green Recycling" certified vessels. It was noted that environmentally friendly ships sold to Bangladesh in recent weeks have changed hands at very low prices, succumbing to the overall downward trend in the market. The overwhelming strength of the US Dollar against local currencies continues to weaken the purchasing power of recycling yards.
Source: www.denizhaber.com
