Sluggish bulker recycling persists as larger ships head for scrap, HKC shifts market mood

BRS Shipbrokers research analyst Vicky Liu told Riviera that, given current freight rates and asset price trends, ship demolition volumes are likely to stay low through the second half of the year.

In its latest monthly report, BRS noted that seven bulk carriers, totalling 0.40M dwt, were sold for demolition in July – down 37% month-on-month, but 300% higher than in the same month last year. Earlier this month, Riviera reported that 38 bulk carriers totalling 2.40M dwt were scrapped in the first half of 2025, slightly above the 2.35M dwt recorded in H1 2024.

Ms Liu explained the Baltic Dry Index has been trending upward since mid-May, with only a brief correction from late June to early July before reaching a new annual high in mid-to-late July.

Meanwhile, the China Newbuilding Price Index for dry bulk vessels has been on a mild downward trend, falling by just 0.4% per month on average in H1 2025. In the secondhand market, prices for five-year-old vessels across major ship types have seen slight declines but have largely stabilised in recent months.

Ms Liu also pointed to the global bulk carrier fleet’s average age of 13 years – still considered in its prime – which further dampens incentives for demolition. “With firm freight rates, resilient asset values and steady buying interest, demolition activity is expected to stay subdued,” she said.

Larger vessels sold for recycling

Recent weeks have seen two large bulk carriers head for demolition. Dalian, a 2002-built Capesize with a light displacement tonnage (ldt) of 21,392, has reportedly been delivered to Bangladesh for an undisclosed price. According to Howe Robinson Partners data, this is the fourth Capesize sold for recycling in 2025.

In addition, 2001-built baby Capesize R Pisces, with an ldt of 19,935, has reportedly arrived in India. BRS highlighted in its monthly report that this is the first vessel worldwide to obtain the International Ready for Recycling Certificate (IRRC), now mandatory for ships of 500 gt and above under IMO’s HKC.

HKC impact on overall volumes

Commenting on the HKC’s influence, Ms Liu noted vessel flows in South Asia are being redistributed. While Bangladesh previously dominated the demolition market, the convention’s implementation has shifted some activity to India, which now boasts 110 HKC-compliant yards compared with Bangladesh’s 13.

“This structural shift reinforces the trend of low demolition volumes, particularly given the relatively young global fleet and stable asset prices, suggesting no significant near-term change in recycling market supply-demand dynamics,” Ms Liu said.

Pakistan, which has made limited progress toward HKC compliance, may also face hurdles. Best Oasis reported recent guidance from the relevant ministry clarifies that a yard seeking certification may recycle only one ship during the approval process, with no moratorium period after completion. “Many had expected multiple ships could be handled while moving toward HKC status,” the report stated, adding this change is prompting buyers to reassess their purchasing strategies.