Middle East conflict delivers double blow to ship recycling markets, warns Wirana

Tensions in the Middle East are placing significant strain on the global ship recycling industry, according to Wirana Shipping, a leading buyer of vessels. The conflict is exacerbating an already difficult commercial environment for recyclers as freight markets remain robust, discouraging shipowners from sending vessels to recycling yards.

The industry faces a double challenge: restricted supply of vessels for recycling due to the strong freight markets, and weakening demand for recycled steel in major recycling destinations, particularly Pakistan and Bangladesh. These destinations have not seen a recovery in steel demand following the end of the rainy season, a period that typically stimulates construction activity and steel consumption.

Wirana Shipping's CEO, Rakesh Khetan, attributes this slowdown to the Middle East conflict contributing to inflationary pressures and economic uncertainty. Despite these factors, ship recyclers are struggling to secure sufficient vessels while also facing weak demand for the steel recovered from those vessels.

Despite the weakening steel markets, recycler offers have remained relatively unchanged across the major recycling destinations, even as domestic steel and scrap prices have weakened in Pakistan and India. However, improved local steel demand could alleviate some of the pressure on recyclers.