The ship recycling market closed 2025 constrained, not distressed. Volumes remained low, prices eased further from early 2024 levels, and the supply of suitable recycling candidates stayed tight. At the same time, work continued at yard level, focused on compliance and operational capability rather than throughput.
This commentary reflects conditions across the main ship recycling markets in South Asia and Turkey, alongside freight and regulatory factors influencing vessel retirement decisions.
Early weeks of 2026 point to a familiar setup. Buyers have capacity. Supply has yet to open up.
The defining feature of 2025 was the lack of recycling candidates. Discussion around ageing fleets and regulatory requirements continued, but owners largely kept ships trading. Freight earnings stayed sufficient across much of the year to delay exit decisions, a pattern that has carried into the start of 2026.
Across recycling destinations, bidding activity came in short bursts. A small number of large LDT transactions, including LNG carriers and older bulkers, stood out. Most weeks were quiet. Yard space was available. Ships did not arrive in volume.
This limited price discovery. Many owners chose to extend trading rather than sell for recycling, even as steel prices softened and wider economic uncertainty grew.
Recycling prices through 2025 remained well below levels seen at the start of 2024, when parts of the subcontinent approached USD 500 per LDT. By year end, pricing had moved lower across all major markets, led by weaker steel plate prices and currency movement.
India saw one of the sharper adjustments. Local steel plate prices fell by about USD 70 per ton during the year. The rupee also weakened against the U.S. dollar, ending near INR 90. Together, these factors reduced pricing strength at Alang.
Bangladesh showed mixed signals. Larger LDT deliveries supported activity earlier in the fourth quarter, then momentum slowed as yards filled and domestic steel trading cooled. Currency stability helped at the margin but did not offset softer demand.
Pakistan remained comparatively steady. Steel prices declined there as well, but domestic conditions held up better than expected and pricing stayed ahead of neighbouring markets for much of the year.
Turkey continued to operate well below the subcontinent on price, shaped by currency pressure and limited inflow of tonnage. Activity matched that reality.
Despite limited throughput, 2025 delivered progress on Hong Kong Convention (HKC) alignment across the region.
By year end, Bangladesh had around 23 HKC-compliant yards. Pakistan reached an important step with its first HKC-approved yard, with more approvals expected in early 2026 as upgrades continue. India retains the largest base, with more than 110 ship recycling yards overall, though compliant capacity still represents a smaller share of the total.
Accreditation alone does not secure business. Delivery certainty, safe execution, and clear documentation are now central to owner decision-making, particularly for vessels under closer scrutiny.
One of the year’s clear themes was the gap between readiness and volume. Capability improved. Throughput did not.
Freight earnings shaped recycling decisions throughout 2025. Dry bulk softened toward the end of the year, yet returns across much of the period were sufficient to keep older vessels active. Tankers followed a similar pattern, stronger earlier in the year and weaker later.
As a result, many recycling decisions were pushed back. Surveys, dry dock cycles, insurance and vetting limits, and vessel age profiles may bring more ships toward recycling during 2026. The timing comes down to operating economics rather than regulation alone.
Sanctioned and shadow fleet vessels are becoming increasingly relevant to ship recycling due to age, safety exposure, and environmental risk.
These vessels present a growing challenge. Many are effectively blocked from compliant recycling due to regulatory and transaction constraints. The result is ageing tonnage remaining in service longer than is prudent, raising the risk of incidents.
A controlled, regulated pathway offers a practical solution. Compliant buyers, HKC-aligned yards, and transparent payment structures already exist. What is missing is a licensing framework that allows sanctioned vessels to be recycled under strict supervision, with full visibility for authorities. Without such a route, the problem compounds over time.
Three points stand out.
First, supply drives the recycling market. Capacity, pricing, and compliance only matter when ships are available.
Second, local conditions increasingly decide competitiveness. Currency movement, domestic steel demand, and import pressure now influence pricing as much as global sentiment.
Third, HKC alignment is becoming standard. Execution will separate markets. Owners focus on clean delivery, clear paperwork, and predictable outcomes.
The outlook for 2026 comes down to vessel availability. If freight earnings soften further, deferred decisions are likely to turn into actual sales. If returns hold, owners will continue to extend asset life.
Bangladesh and Pakistan appear ready to absorb higher volumes if political and operational stability holds and further approvals progress. India retains unmatched scale and experience, though pricing strength depends on domestic steel demand and currency conditions. Turkey is likely to remain volume-limited unless regional trading patterns change.
Steel prices and exchange rates will set the ceiling. Even with more candidates, weak domestic demand will cap pricing upside.
2025 was a year of preparation rather than volume. The industry enters 2026 with more compliant capacity and stronger yard readiness.
The key question for the year ahead is when vessel supply returns and whether sanctioned ships are given a lawful route to recycling before safety or environmental incidents force the issue.
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Nayeem Noor is currently serving as the VP of Business Development at GMS, the world’s largest buyer of ships and offshore assets for recycling. An alumnus of the prestigious Indian Institute of Technology (IIT) Roorkee, Nayeem combines market intelligence with disciplined communication, helping counterparties align on timing, risk, and execution across shipping and offshore asset cycles.
Kiran Thorat is a trader at GMS and the Head of the India Office. He looks after sustainable ship recycling projects (an integral part of sustainable shipping and the circular economy). He holds a Bachelor's Degree from the Marine Engineering and Research Institute (MERI), India and a Master's Degree in Energy, Trade, and Finance from Cass Business School, London.
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