Recently, waning interest in older vessels in the secondhand market and softening demand for steam turbine LNG carriers are expected to bring a temporary respite to the otherwise tight ship recycling supply in the coming weeks. Singapore-based shipbroker Wirana Shipping anticipates that these two factors will accelerate the entry of such vessel types into the demolition and recycling process.

For a long time, the supply of vessels entering the ship recycling market has remained in short supply, but this situation may now be turning around. Wirana Shipping forecasts a certain improvement in recycling supply, with growth momentum coming mainly from the dry bulk carrier and LNG carrier segments.

In its latest Demolition Market Report & Outlook, Wirana Shipping noted that the flow of candidate vessels entering the recycling market has improved over the past week, covering various ship types including tankers, dry bulk carriers, and LNG carriers. Although the company expects overall market supply to maintain a slow-to-moderate pace over the next few weeks, it believes that subsequent supply volumes are likely to increase on that basis, with particularly notable gains in the dry bulk and LNG carrier segments.

The brokerage believes that dynamic changes in the secondhand market are a key factor driving this trend. Wirana Shipping observes that current secondhand transactions for dry bulk vessels are mainly concentrated on modern eco-friendly tonnage, while older ships are attracting almost no buyers, largely due to increasingly stringent environmental compliance requirements. This implies that for older, less energy-efficient vessels, the channels through which owners could continue to resell them for further operation are narrowing, making recycling and demolition an increasingly attractive exit option.

Hitesh Vyas, Wirana Shipping's Middle East Vice President and Green Recycling Coordinator, commented: "For some time, strong freight rates and an active secondhand market allowed owners to keep older vessels in operation without considering demolition. Now we are beginning to see signs of a shift in this landscape, as secondhand buyers are focusing more on modern, energy-efficient tonnage."

"If demand for older vessels continues to weaken, owners will have to assess more carefully whether it is more valuable to continue operating or try secondhand sales, or whether it is more advantageous to cash in on the current recycling market. We believe that dry bulk carriers and LNG carriers are likely to be the first segments to reflect this trend and translate into incremental recycling candidates."

This shift comes as shipbreakers in the Indian subcontinent continue to show strong interest in available vessels. In India, improved steel market conditions have boosted buyer confidence, with local steel plate prices rising by USD 31 per metric tonne over the past five weeks. Wirana Shipping states that Indian recyclers are currently willing to raise offers symbolically by USD 10 per long ton light displacement (LT LDT), with further premiums possible for suitable vessel types.

Pakistani recyclers are also showing strong interest in available dry bulk vessels and are willing to pay premiums above existing price levels; in Bangladesh, candidate dry bulk and tanker tonnage has also received good response from buyers.

Wirana Shipping expects recycling supply to return to moderate levels in the short term, with dry bulk carriers and LNG carriers projected to be the main contributors to available demolition tonnage.