The sanctions package hanging over last week’s market has now landed. Washington broadened its economic campaign against Iran this week, extending the reach of secondary sanctions and placing shipping firmly within the latest measures. For a recycling market already navigating increasingly complex ownership structures, registries, trading histories and compliance exposure, the implications are clear. The pool of available candidates is already limited. The pool every destination can safely handle is smaller still.
Oil meanwhile surrendered much of the previous week’s advance. Brent retreated back toward the high USD 80s per barrel, while WTI eased into the low USD 80s as improving Gulf flows removed some of the urgency from the supply story. The political impasse remains unresolved, but the barrel has once again distinguished disruption from outright shortage.
Freight moved firmly the other way. The Baltic Dry Index rallied above 3,100 to its strongest level since early June, with Capesizes leading the advance while Panamax and Supramax markets remained healthy. Tanker earnings also continue to benefit from Gulf disruption and altered trading patterns. For recycling, the conclusion remains familiar. Ageing ships are still earning enough money to stay at sea.
That freight strength remains the principal constraint on recycling supply. Fresh candidates continue to be remarkably sparse, despite healthy end-user appetite across the sub-continent. Buyers are available, yards have capacity and recent competition has shown how quickly numbers can move when suitable tonnage appears. What the market lacks is a steady flow of owners ready to sell.
Currencies were comparatively quiet. The Indian Rupee recovered some ground, the Pakistani Rupee strengthened again and the Bangladeshi Taka remained relatively steady against the Dollar. Turkey continued along its familiar path, with the Lira weakening into fresh record territory. With no major new inflation prints this week, oil, freight and the Dollar have again done most of the moving.
At the beaches, physical activity has improved more than the thin fresh-sales market would suggest. Chattogram turned over several units through the latest tide, Gadani finally started receiving some of the tonnage secured during its recent buying run, and Alang added another sizeable gas carrier to its pipeline. Much of this tonnage, however, was committed earlier. The beaches are consuming the existing pipeline faster than owners are replenishing it.
Bangladesh’s wider market has also been overshadowed by the tragic accident earlier this month. Government authorities have suspended operations at the affected facility and opened formal investigations into the incident and the safety failures surrounding it, with further activity there halted pending the relevant findings and corrective measures.
August therefore closes with buyers willing, beaches active and fresh supply still stubbornly thin. Pakistan has cooled from its recent spike, Bangladesh is moving tonnage but needs fresh sales, and India continues to gather momentum through specialist and higher-value units. The beaches are moving. The supply line is not.
Source: GMS, Inc
