Week 16 of 2026 reinforces the core constraint in global ship recycling markets, as vessel supply remains limited despite shifting macro signals. While last week suggested a possible inflection point, this week confirms that owners are still holding onto tonnage.

The macroeconomic environment continues to be shaped by geopolitical uncertainty. Discussions between the United States and Iran have moved toward a temporary ceasefire extension rather than a full resolution, leaving the Strait of Hormuz effectively constrained. Brent crude prices have softened to the mid 90 dollar range, driven more by demand concerns than by any meaningful de escalation. At the same time, the physical oil market remains tight, creating a mixed signal for market participants.

Freight markets provide a clearer direction. The Baltic Dry Index has extended its rally to the highest levels since December, supporting strong vessel earnings. This continues to delay recycling decisions, as owners find it more profitable to keep older vessels trading rather than selling them for demolition.

Bangladesh remains the most competitive and active recycling destination. Steel plate prices are holding at elevated levels near BDT 71,000 per ton, and currency stability allows these gains to translate directly into stronger bidding capacity. The Letter of Credit situation continues to improve, supporting transaction readiness. However, the pre monsoon window is now a critical factor, with only a few weeks remaining to secure and process incoming vessels. Compliance concerns also persist, as unresolved sanctioned vessels continue to reinforce stricter due diligence across the market.

India faces a more challenging environment. The Indian Rupee has weakened slightly, and ongoing energy supply disruptions linked to the Hormuz situation continue to affect steel production in Alang. Steel prices have shown volatility through the week, limiting the ability of recyclers to improve bids. Despite maintaining strong HKC compliant infrastructure, India remains constrained by the lack of incoming tonnage.

Pakistan continues to build momentum and is now in one of its strongest positions this year. A stable currency and rising steel prices, now around PKR 188,000 per ton, have strengthened recyclers' pricing capability. The ongoing regional situation continues to support Pakistan’s proximity advantage for Gulf sourced vessels, reinforcing its position as the second most competitive destination. However, the timing of vessel arrivals remains critical.

Turkey remains largely unchanged. The Lira has stabilized and inflation has eased slightly, but pricing levels remain significantly below those of the subcontinent. As a result, Turkey continues to operate mainly within the EU regulated recycling segment, where compliance outweighs pricing considerations.

No major recycling transactions were reported this week, highlighting the persistent lack of supply across all key markets. Port activity remains limited, further reinforcing the imbalance between demand and available tonnage.

The key theme remains unchanged. Recyclers are ready to acquire vessels, supported by strong pricing and improving fundamentals. However, supply continues to lag. As the monsoon season approaches, the market faces increasing pressure to secure tonnage within a narrowing window. The direction of the market now depends on whether vessel supply returns in time or continues to be delayed by strong freight markets and ongoing geopolitical uncertainty.

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