Ship recyclers go from shortage to potential glut

Only 53 recycling facilities in India and Bangladesh have formal authorisation.

South Asian ship recyclers are paying unsustainable prices for scarce vessels even as thousands of ageing ships approach retirement, setting up a potential capacity crunch as stricter recycling rules limit where they can be scrapped.

“The competition has gone up, and the supply of recycling tonnage is still less,” Hitesh Vyas, vice-president and green recycling coordinator at Wirana Shipping Corporation, told Marine & Industrial Report via Zoom. “The competition has now pushed up the prices that they have to pay to get a ship as well.”

Vyas said recyclers have faced the pressure for nearly two years, with competition and local steel prices affecting what ship recycling facilities can afford to pay.

Nearly 2,000 container ships with more than five million twenty-foot equivalent units (TEU) of capacity are at least 20 years old, the Baltic and International Maritime Council (BIMCO) said in a September report.

Those ships will reach or exceed the historical average recycling age of 25 within five years, creating a potentially large supply of vessels for scrapyards.

BIMCO separately estimated in June 2025 that 16,000 ships could be recycled over the following decade, equivalent to about 1,600 annually.

Vyas said recycling is unlikely to increase at a steady pace. About 2,000 ships totalling 12 million lightweight tonnes were recycled in 2012, compared with roughly 400 ships and 2.6 million tonnes in 2025.

China’s decision in 2019 to stop accepting foreign-flagged ships for recycling removed about 17% to 20% of global capacity, he said.

China is not a party to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships and prohibits foreign ship imports for recycling.

Bigger vessels could add pressure to the remaining yards. Vyas said the average container ship has nearly doubled in size, whilst dry cargo vessels have grown by as much as 30%.

India and Bangladesh have only 53 facilities authorised to recycle ships under the convention, according to an International Maritime Organization list as of 29 September. India has 36 and Bangladesh 17, whilst Pakistan has none.

More facilities have demonstrated compliance with similar standards but have yet to receive authorisation. Nippon Kaiji Kyokai (ClassNK) alone has issued 79 statements of compliance across India, Bangladesh, and Pakistan.

Takeshi Naruse, manager for green certification at ClassNK, said inspections must take place whilst ships are actually being recycled to verify that yards follow required procedures.

“However, due to the recent market conditions and other factors, some facilities have been unable to secure ships for recycling, making it difficult to conduct site inspections in a timely manner,” he said.

That creates a cycle in which scarce ships make certification harder to obtain, potentially limiting the number of yards able to compete for future vessels.

Türkiye is further ahead, with 18 of 22 facilities in Aliaga holding formal authorisation.

South Asia handles about 80% to 85% of global recycling tonnage despite accounting for about 43% of merchant ship ownership, Vyas said.

Rules restricting where ships can be recycled also affect where future tonnage will go. These include the Basel Ban Amendment, EU Waste Shipment Regulation, and EU Ship Recycling Regulation, which restricts some ships from being sent to yards outside developed economies.

Asian-flagged vessels account for 24% of the roughly 2,000 container ships approaching the 25-year recycling threshold, compared with 30% of the overall fleet, Niels Rasmussen, chief shipping analyst at BIMCO, said in an emailed reply to questions.

Asian-owned vessels account for about 27% of the ageing ships, compared with about 46% of the overall fleet.

Rasmussen said much of the capacity eventually removed will come from ships larger than 12,000 TEU, leaving routes connecting Asia with Europe, the Mediterranean, Middle East, North America, Africa, and South America most exposed.