Ship Recycling Facing Weak Prices and Tough Rules

December 2, 2025

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Ship recyclers are ending 2025 in a strange mix of tight supply and weak pricing. Subcontinent yards in India, Pakistan and Bangladesh are struggling to keep offers near 400 dollars per LDT as steel plate values and local currencies drag them down, while the flow of demolition candidates remains thin for a fourth year in a row. At the same time, the Hong Kong Convention has finally entered into force, the EU has tightened its recycling list and is pushing back on flag hopping, and the first fully certified yards in Bangladesh and Pakistan are chasing a limited pool of compliant business. For owners, that means low scrap proceeds today but rising pressure to plan where and how older ships will be cut in a much more regulated market.

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Ship recycling in 30 seconds

Ship recycling in 2025 is caught between weak prices and stronger rules. Subcontinent offers often sit near or below 400 USD per LDT and the flow of demolition candidates stays thin, even as the global fleet ages. At the same time, the Hong Kong Convention has entered into force, the EU Ship Recycling Regulation is being enforced more tightly and upgraded yards in Bangladesh, India and Pakistan are competing for a limited pool of compliant business.

📊 Market backdrop

Steel plate values, currency moves and tight credit keep yard offers under pressure, so many owners prefer to trade mid 2000s and early 2010s tonnage rather than accept low scrap proceeds, delaying the normal demolition cycle.

⚓ Regulation and yards

Hong Kong Convention requirements on Inventories of Hazardous Materials and authorised facilities now sit alongside the EU list, pushing more end of life ships toward certified yards and raising costs for facilities that have invested in safer, traceable methods.

🧭 Fleet and finance trends

An ageing block of bulkers, tankers and boxships from the 2008 to 2012 order boom is moving toward key surveys just as banks, export credit agencies and some charterers start to treat recycling policy as part of their ESG and credit checks.

Bottom line: 2025 is still a low volume year for demolition, but it is locking in the standards, yard capacity and financing expectations that will shape how the next wave of end of life ships is recycled when market conditions and regulation finally force more vintage tonnage off the water.

Item	Summary	Business mechanics	Bottom line effect
Ship recycling Prices, Regulation and the Slow Demolition Cycle
Pricing and volumes	Cash buyers report a "tough year" as steel plate values in India, Pakistan and even China slide and subcontinent offers struggle to stay near 400 USD per LDT. Bangladesh can still pay a small premium, but overall demo volumes remain thin and yards are underutilised.	Steel prices, currency moves and local credit lines limit what recyclers can pay, while firm freight and secondhand markets keep older bulkers, tankers and boxships trading longer than usual. The result is a four year stretch of scarce candidates despite a visibly aging fleet.	📉 Scrap proceeds disappoint and do not move the needle on leverage. 📈 Owners with liquidity can wait for a pricing upturn instead of selling into a weak yard market.
Subcontinent benchmarks	Recent indications put Bangladesh around 425 to 445 USD per LDT for containers and wet tonnage, and about 405 to 415 USD for dry units. Pakistan trails slightly, while Indian levels have dipped below 400 USD for many ship types.	Yards that upgraded for higher standards now face the same steel and currency headwinds as older facilities but need stronger cash flow to cover capex. This widens the gap between what sellers expect and what even the best yards can realistically offer.	📉 Many owners see more value in a soft charter market than on the beach. 📈 A sharp rebound in steel could quickly swing sentiment and trigger a catch up wave of sales.
Hong Kong Convention in force	The Hong Kong Convention entered into force on 26 June 2025, creating the first global framework for safe and environmentally sound ship recycling. It now applies in 24 contracting states that together meet the tonnage and recycling thresholds.	Ships of 500 GT and above under HKC flags must keep an Inventory of Hazardous Materials and go to authorised facilities at end of life. Class, flag and insurers are folding HKC rules into their own compliance checks and documentation, linking recycling choices to certification across the ship life cycle.	📈 Owners can work with a single global rule set instead of a patchwork of voluntary schemes. 📉 Cutting corners on HKC compliance now carries higher legal, reputational and insurance risk.
EU rules and flag hopping	The EU Ship Recycling Regulation still forces EU flagged ships above 500 GT to use yards on the European list, which was updated again in February 2025 and now includes around forty three facilities in Europe, Türkiye and the United States.	The latest evaluation highlights that some owners are still switching flags before recycling to avoid EU list obligations. Brussels has signalled it may tighten enforcement and close loopholes, which would put more pressure on operators that use last minute re flagging as an exit tool.	📉 EU tonnage that tries to escape the list faces regulatory and legal scrutiny. 📈 Owners that align policy with EU and HKC rules gain smoother access to European finance and charters.
Upgraded yards in Asia	GMS notes that Bangladesh is leading late in 2025, with a cluster of HKC style yards competing hard for the few ships in play. Pakistan has just seen its first recycling yard independently verified as fully Hong Kong Convention compliant.	These yards have invested in impermeable floors, drainage systems, lifting equipment and hazardous waste management in order to win work from blue chip fleets and meet IHM based requirements. However, with limited tonnage and softer prices, recovering that investment takes longer than planned.	📈 Certified yards can pitch for higher value projects and long term recycling frameworks. 📉 Underused capacity erodes profitability if volumes do not pick up when older ships finally head to the beach.
Aging fleets, slow scrapping	The average age of many bulk and tanker segments has climbed as owners hold on to mid 2000s and early 2010s tonnage. Weekly recycling reports talk about a "deadly dearth" of candidates even with a growing pool of ships over twenty years of age.	Owners weigh special survey and retrofit costs against the option value of another cycle. With CII, ETS and fuel rules still evolving, some prefer to delay big decisions rather than crystallise a low scrap price and then commit to expensive newbuilds.	📉 Older, less efficient ships stay in the competitive pool and widen the performance gap to modern designs. 📈 If freight turns and regulation tightens, demolition could move quickly from drought to flood and tighten capacity for compliant yards.
Finance and ESG pressure	Banks, export credit agencies and some charterers now treat end of life policy as part of their ESG review. Poseidon Principles and similar frameworks reference HKC, EU SRR and IHM compliance when assessing portfolio alignment and risk.	Sustainability linked loans, green or transition products and some long term contracts ask owners to commit in advance to approved yards. Past beaching decisions can trigger extra questions on new deals, including higher margins or tighter covenants.	📈 Clear, documented recycling policies can lower the cost of capital and widen the pool of counterparties. 📉 Weak policies or opaque past practices can become a drag on refinancing, IPO and sale processes.
Market growth and circular steel	Analysts estimate the global ship recycling market at about 9.1 billion USD in 2025, with potential growth to around 13 billion USD by 2030 as more end of life tonnage and higher value projects reach upgraded yards. Scrap steel is also being framed as a tool for decarbonising regional steelmaking.	High quality scrap from controlled cutting can reduce blast furnace emissions or support electric arc furnace strategies, especially in Europe and Türkiye. That gives policymakers another reason to push ships into compliant recycling channels rather than informal breaking sites.	📈 A stronger link between recycling and green steel could support better long term pricing for compliant yards and owners. 📉 Operators that stay outside traceable chains may find their scrap less desirable or more heavily discounted.
Risk and enforcement	Legal firms are warning that with HKC active and EU rules tested in court, enforcement on illegal exports and unsafe recycling is likely to increase. Past cases where NGOs and prosecutors pursued owners for beaching EU related ships have sharpened awareness of liability.	Compliance is no longer just about the last flag or sales contract. Investigators look at beneficial ownership, decision making and the whole chain of transactions that moved a ship from trade to the cutting torch, including any interim "cash buyer" steps.	📉 Treating recycling as a quick exit can backfire through fines, litigation and reputational damage. 📈 Early planning with legal, technical and financing input helps keep end of life decisions aligned with broader corporate risk appetite.
Outlook 2026 to 2030	A large wave of ships built in the 2008 to 2012 ordering boom is moving into the twenty year zone just as HKC implementation ramps up and decarbonisation rules tighten. Market forecasts suggest more value, and more scrutiny, will flow into recycling in the next five years.	Demolition activity will depend on freight cycles, new fuel economics and regulatory thresholds for older designs. Yards that combine scale, certification and data rich processes are positioned to gain share when the cycle finally turns from "too few ships" to "too many at once".	📈 Those who map candidates, yard options and financing now can capture value and avoid congestion when the wave hits. 📉 Owners who delay planning risk weaker prices, longer waits and fewer compliant choices when they eventually scrap.
Notes: Data and trends reflect late 2025 market reports from cash buyers and brokers, public material from IMO on the Hong Kong Convention, EU Ship Recycling Regulation evaluations and independent analysis of global ship recycling market size and growth. Actual scrap prices, yard availability and regulatory duties vary by flag, ship type, location and counterparty.

Ship recycling 2025: where pressure is building

Scrap prices are soft, Hong Kong Convention rules are active and a large block of 15 to 20 year old ships is still trading. Pressure is shifting from price alone to a mix of timing, compliance and balance sheet strength on both sides of the beach.

Market signal

Weak prices and few candidates

Subcontinent offers often sit near or below 400 USD per LDT while the pool of demolition tonnage stays small, even as the fleet ages.

Regulatory signal

Rulebook getting tighter

Hong Kong Convention and EU rules are pushing more end of life ships toward listed or HKC aligned yards with documented IHM and waste handling.

Fleet signal

Age and efficiency pressure

More bulkers, tankers and boxships from the 2008 to 2012 cycle are approaching surveys with weaker efficiency scores and higher retrofit needs.

Owners: how current choices shape exits

Vintage tonnage can still earn, but it also compresses the timetable for capex, compliance and recycling.

Keeping older ships on the water remains profitable in several segments, yet it pushes major survey, retrofit and end of life decisions closer together later in the decade.
Inventories of Hazardous Materials and shortlists of HKC or EU compliant yards are increasingly being treated as standard documentation rather than optional extras.
Publicly stated recycling frameworks are now turning up in loan files, bond prospectuses and long term charter negotiations as counterparties test how end of life risk is handled.

Yards and cash buyers: margin and access risk

Upgraded facilities need tonnage and scrap values to justify investment, but the inflow remains thin.

HKC aligned yards carry higher fixed costs for impermeable floors, waste treatment and lifting gear while competing over a limited flow of end of life vessels.
Softer steel prices and tight local credit conditions cap offered levels even where physical capacity and labour are available.
Facilities that cannot document standards, certification and traceability are increasingly screened out of RFQs by large fleets, banks and export credit agencies.

End of life planning: current fleet profiles in focus

Stronger balance sheet, older ships Analysts point to a group of owners that can map HKC compliant exits and align survey dates with expected rate cycles rather than reacting under time pressure.	Stronger balance sheet, younger ships Another cluster is using the lull in demolition to formalise recycling standards and IHM work for vessels that will not leave the fleet for several years.
Stretched balance sheet, older ships For more leveraged players, market commentary highlights a tension between waiting for stronger rates and the cost of forthcoming surveys on mid 2000s tonnage.	Stretched balance sheet, mixed fleet Some operators are already testing the market for selective disposals where compliant scrapping would simplify covenant discussions and reduce operating exposure.

What the market is watching next

Whether a softer freight cycle or tighter efficiency rules will finally trigger a larger wave of demolition sales from the 2008–2012 tonnage block.
How consistently Hong Kong Convention and EU Ship Recycling Regulation rules are enforced in practice, including any high profile cases around non compliant disposals.
How quickly banks, export credit agencies and major charterers build explicit recycling metrics into their own lending, investment and contract decisions.

Taken together, current recycling conditions point to a delayed but sharper correction: weak scrap prices and firm freight keep older ships trading, while Hong Kong Convention and EU rules steadily raise the bar on where and how they can be cut. Owners that map candidates, preferred yards and financing terms now will have more room to choose timing and structure when the balance finally flips toward higher demolition volumes and tighter compliant capacity.

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