The global ship recycling market is showing clear signs of recovery. After a prolonged slowdown, an increasing number of scrapping deals—particularly involving container ships and bulk carriers—are now being reported.

While this resurgence supports the green renewal of the global fleet, it raises a critical question: where will these ships be recycled—and will it be done sustainably?

Recycling Market Rebounds After Slump

The recent uptick in shipbreaking activity comes as market conditions shift:

• The container shipping boom has subsided
• Freight rates have failed to rebound as expected
• Older vessels are becoming less economically viable to operate

This marks a sharp turnaround from the previous year, when high charter rates encouraged shipowners to keep ageing vessels in service rather than send them for recycling.

According to NGO Shipbreaking Platform:

• 443 vessels were scrapped last year, down from 763 in 2021
• 292 vessels were dismantled in India, Bangladesh, and Pakistan, compared to 583 the previous year

Notably, around 70% of India’s green recycling yard capacity remained idle, highlighting a mismatch between available infrastructure and recycling demand.

India’s Green Yards Set to Benefit

South Asia continues to dominate global ship recycling, handling the majority of scrapped tonnage worldwide.

Among the region:

• India stands out as the leading green recycling destination
• Many Indian yards already comply with the Hong Kong Convention (HKC)
• Facilities, particularly in Alang, have undergone significant upgrades

These yards are well-positioned to benefit from the current wave of scrapping due to:

• Competitive steel prices
• Lower operational costs
• Improved environmental and safety standards

Recent increases in steel plate prices have further incentivised recycling, leading to a growing number of concluded deals.

Bangladesh and Pakistan: Challenges Remain

While yards in Bangladesh and Pakistan are actively pursuing recycling opportunities, they face financial constraints:

• Difficulty securing letters of credit
• Liquidity challenges linked to broader economic conditions
• Ongoing negotiations with the International Monetary Fund (IMF)

These factors limit their ability to capitalise fully on the current recycling momentum.

A Shift Toward Responsible Ship Recycling

Historically, South Asian shipbreaking has faced criticism due to:

• Worker safety incidents
• Environmental pollution
• Informal and unregulated practices

However, the landscape is evolving.

Driven by increasing pressure from regulators, cargo owners, and investors, many yards are now:

• Investing in modern infrastructure (e.g., heavy-lift cranes)
• Implementing safe hazardous waste management systems
• Training workers in health, safety, and environmental practices
• Adopting structured ESG frameworks

Major shipping companies such as Maersk have also played a role in supporting responsible recycling initiatives in the region.

The Looming Capacity Challenge

Looking ahead, the industry faces a significant capacity challenge.

With tightening environmental regulations and fleet decarbonisation:

• A surge in scrapping of large vessels is expected
• Existing compliant yard capacity may not be sufficient
• Pressure will increase on approved recycling facilities

This makes the role of HKC-compliant yards more critical than ever.

The Role of Regulation and Policy

Regulatory alignment will be key to addressing future demand.

Key developments include:

• Potential full enforcement of the Hong Kong Convention, which would raise global standards
• The EU Ship Recycling Regulation (EUSRR) requiring EU-flagged vessels to use approved yards
• Proposed amendments to the EU Waste Shipment Regulation (WSR) to allow broader inclusion of non-EU yards

At the same time, recent removals of Turkish yards from the EU-approved list have further constrained available capacity.

To avoid a bottleneck, there is an urgent need to:

• Expand the EU-approved yard list
• Harmonise conflicting international regulations
• Incentivise non-EU yards to achieve compliance

Why Independent Oversight Matters

For ship-owners, selecting a compliant yard is only part of the solution.

To meet growing ESG expectations, it is essential to:

• Conduct proper due diligence
• Ensure continuous third-party supervision
• Maintain auditable documentation of compliance

Independent monitoring throughout the recycling process ensures that standards are not only met—but consistently upheld.

Conclusion: Turning Momentum Into Sustainable Progress

The recovery in ship recycling activity is a positive signal for the maritime industry’s transition toward greener operations.

However, without sufficient green shipbreaking capacity, this momentum could quickly turn into a bottleneck.

The path forward requires:

• Increased investment in compliant recycling infrastructure
• Stronger regulatory alignment
• Greater industry accountability

Only then can the industry ensure that the next wave of ship recycling is both scalable and sustainable.

Final Note

Sea Sentinels has specialist expertise and long experience in safe and sustainable recycling of marine assets and can manage every step of the recycling process from benchmarking and vetting of yards and inventory of hazardous materials to independent on-site monitoring by expert and experienced personnel to ensure compliance with regulations, with auditable reporting to verify compliance.

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Contact

Rakesh Bhargava
CEO, Sea Sentinels
📧 rakesh.bhargava@sea-sentinels.com
📞 +60 12 215 0137