The second week of February brought about a confusing spin to the markets, with fundamentals across the board performing bizarrely compared to last week's performance. Reports from cash buyer GMS indicate that the Baltic Exchange Dry Index and oil futures found steady ground this week, while the U.S. Dollar firmed against all ship recycling nation currencies except India. This unexpected stability is a welcome respite for the industry, which has been struggling with volatility in recent weeks. As a result, prices have begun to stabilize, providing some much-needed clarity for buyers and sellers alike.
The Baltic Exchange's Dry Bulk Index fell 0.6% this week, primarily due to pressure from larger-sized segments. The Capes index saw a nearly 2% decline, while the Panamax index slipped by a matching 0.6%. However, the Supra index bucked the trend, improving by an impressive 1.8%. These mixed results suggest that the market is still grappling with supply and demand imbalances, but is slowly beginning to find a footing.
The oil futures market has also seen some stability, with WTI crude oil prices hovering around $62.8/barrel. This price level is causing concern among investors and traders, who are worried about the potential impact of ongoing tensions between the U.S. and Iran on global oil supplies. The fear of supply disruptions could have a devastating effect on oil prices worldwide, making it essential for buyers to take a cautious approach.
For the ship recycling world, the Chinese New Year holiday period is likely to bring even quieter markets. China's subdued international ship recycling market is already struggling with lower volumes and depressed prices, and the lack of potential recycling candidates will only exacerbate these issues. The industry has been experiencing record-low delivery rates over the past few years, and the current price levels are significantly lower than the highs of $600/LDT.
The incoming Year of the Horse may bring some better times for the industry, but it's unclear whether this will be enough to reverse the recent trend of declining recycling tonnage. The depreciating levels of residual values from ships have had a significant impact on the books of owners and operators, making it essential for them to take a proactive approach to recycling their vessels.
Despite the challenges facing the industry, recycling markets appear to have stabilized in certain regions. The Pakistani market remains the firmest, with the cheap influx of Iranian imports having ceased for the time being. Gadani steel plate prices continue to dominate industry levels, providing some much-needed stability for buyers and sellers.
The Indian market has also seen some stabilization, with currency concerns consuming the country's sanity since the start of the year. However, this trend may be short-lived, as the situation remains precarious. The Turkish market, on the other hand, has slipped back into obscurity after a brief surge in RoRos imports.
Overall, it seems that things couldn't get any worse than they have for the industry, and levels may have reached a state of equilibrium for the year. However, supply must deliver on its side of the bargain to prevent further declines in prices and volumes. The coming weeks will be crucial in determining the direction of the market.
Market rankings and pricing for week 7 of 2026 are not yet available, but it's clear that the industry is bracing itself for a quieter period ahead of the Chinese New Year. As buyers and sellers navigate this challenging landscape, they must remain vigilant and adapt to changing circumstances to ensure their success.
The ship recycling industry is bracing itself for a quieter period ahead of the Chinese New Year, with many expecting lower volumes and potentially fewer recycling candidates.
