Wirana Shipping has warned ship owners that with the unexpected rise in scrap prices in Bangladesh, there is a limited opportunity to secure higher prices. This price increase comes at a time when the domestic steel market in Bangladesh continues to face weakness.
Current State of the Recycling Market
This company, one of the oldest buyers of old ships in the world, has stated that the current price levels may be temporary and, given the limited number of ships available, competition among recyclers has intensified, pushing prices beyond a level that the steel market can sustain.
According to Wirana's latest weekly market report, a dry cargo ship for recycling in Bangladesh has sold for nearly eight percent higher than last week's prices. This price increase occurs while domestic steel demand remains weak, and local mills are cautious in purchasing and stockpiling materials. Wirana believes that such high prices may only be achievable for three or four more ships, which could present a valuable opportunity for ship owners considering selling their vessels.
Challenges Facing the Bangladeshi Recycling Market
Rakesh Khatam, CEO of Wirana, said: “What we are seeing in Bangladesh is a strange situation where scrap prices are rising despite weak demand for steel. Recyclers are eager to buy ships, but simply not enough ships are entering the market.”
This competition has provided an opportunity for ship owners to obtain prices that may not be available in the coming weeks. However, these price levels lack support from the steel market, and we do not believe that these prices can remain sustainable indefinitely.
The Bangladeshi recycling market is also facing disruptions due to festival holidays, with trading occurring only on two days during the reporting week. Prices for local steel plates, local scrap, and imported shredded scrap have remained generally stable.
The global maritime transport market also continues to impose restrictions on access to recycled ships, and relatively good charter revenues encourage owners to keep old ships in the commercial cycle rather than sending them for demolition.
Khatam added: “Ship owners need to carefully assess the business realities. Waiting for further price increases could mean missing out on an opportunity created by a temporary imbalance between supply and demand. For ship owners who have already decided to recycle, the coming days could offer very attractive conditions. Timing will be crucial in this regard.”
