Ship Recycling Outlook: Navigating Tonnage, Prices & ESG Pressure in 2025

The global ship recycling industry is entering an era marked by rapid change, heightened regulatory oversight, and intensifying calls for sustainable, responsible business conduct. As a cornerstone of the circular economy within the metals industry, ship recycling bridges the gap between environmental stewardship, raw material demand, and stakeholder accountability. With market economics, fleet renewal cycles, and Environmental, Social, and Governance (ESG) expectations converging, shipowners, buyers, and facility operators must adapt with agility and strategic foresight.

This in-depth analysis unpacks 2025’s ship recycling outlook, diving into pivotal market drivers, detailed tonnage and pricing trends, evolving ESG mandates, and strategies to stay competitive amid shifting landscapes.

Table of Contents

• The State of Ship Recycling in 2025: An Overview

• Key Market Drivers Shaping Ship Recycling

• Global Tonnage Trends: What’s Being Scrapped?

• Pricing Dynamics: What’s Moving Scrap Values?

• ESG Pressure: The Game-Changer in Ship Recycling

• Scenario Analysis: What Could the Next Decade Hold?

• Actionable Takeaways for Buyers and Sellers

• Conclusion: Sustainability and Opportunity

The State of Ship Recycling in 2025: An Overview

The global shipping sector is on the verge of a profound transformation. The average age of active vessels continues to rise, with Clarksons Research estimating that approximately 29% of bulk carriers are now over 15 years old as of Q1 2025. This demographic shift is driving record numbers of aging ships toward decommissioning and eventual recycling.

At the macroeconomic level, scrap steel demand is picking up pace and international metals prices have rebounded from their 2022–2023 lows. According to the World Steel Association, global steel demand in 2025 is projected to stabilise at about 1.75 billion tonnes, broadly flat compared with 2024, with growth driven by government investment in infrastructure from India to the US. This renewed appetite boosts the viability and profitability of ship recycling, as recycled steel from vessels is a critical supply source for downstream industries.

Overlaying these market fundamentals are tightening international regulations. The enforcement of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), which entered into force on 26 June 2025, will profoundly alter industry practices. EU Ship Recycling Regulation (EU SRR) is already triggering a migration of tonnage toward compliant yards on the EU-approved list.

Signal Summary:

• Fleet Age: Rising, with large tonnages past prime operational years.

• Material Pricing: Upward pressure from structural demand, but cyclical softness in some regions.

• Regulatory Climate: Tighter compliance, especially for EU-flagged and major international owners.

• Sustainability: ESG is becoming integral to transaction value and brand perception.

With these factors interplaying, the ship recycling landscape in 2025 demands sophistication, long-term planning, and a firm grasp on compliance as a core value proposition.

Key Market Drivers Shaping Ship Recycling

Market dynamics in 2025 are shaped by several mutually reinforcing drivers. Understanding each creates a solid foundation for strategic decision-making.

Fleet Aging and Environmental Regulation

Between 2005 and 2010, global shipyards experienced an unprecedented spate of orders. The result: by 2025, a significant part of the world’s merchant fleet is naturally progressing toward the end of its economic lifespan. This is especially pronounced in the dry bulk, crude tanker, and general cargo segments, where vessels often become technologically obsolete after 20–25 years due to engine inefficiency, increased maintenance costs, and regulation.

Regulatory developments are compounding the pressure on older ships. The International Maritime Organization’s Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) rules, introduced in 2023, penalize high-emitting and poorly performing ships. Major operators face the choice between costly retrofits, such as exhaust gas cleaning systems, hull modifications, or alternative fuel conversion, or scrapping.

Case Study:

Maersk accelerated the recycling of over 10 container vessels in 2023 to align with its Net Zero commitment and avoid CII non-compliance penalties, demonstrating the direct impact of regulation on scrap flows.

Commodity and Steel Demand

Ship recycling supplies roughly 2–3% of global steel demand annually, with the bulk consumed by construction and manufacturing sectors in India, Bangladesh, and Turkey. As these economies invest heavily in infrastructure, demand for ferrous scrap rises. India’s National Infrastructure Pipeline and Bangladesh’s ongoing megaprojects, such as the Padma Multipurpose Bridge, are illustrative.

Scrap steel from ships provides an attractive, lower-carbon alternative to virgin steel production. According to the International Energy Agency (IEA), replacing one ton of virgin steel with scrap reduces carbon dioxide emissions by up to 80%. This further fuels interest as manufacturers seek to meet their own Scope 3 carbon targets and procurement commitments.

Freight Rate Volatility

Freight rates serve as a critical determinant of scrapping timing. When rates are elevated, shipowners maximize earnings from older vessels despite inefficiencies. When rates normalize or fall, often in tandem with orderbook deliveries, scrapping becomes the preferred option.

Example:

The Baltic Dry Index (BDI) averaged about 1,120 points in Q1 2025, around 80% below its October 2021 peak of about 5,650 points, reducing the incentive to keep elderly ships trading once market spikes fade.

Currency Fluctuations and Local Market Dynamics

Ship recycling remains heavily concentrated in South Asia. Currency strength against the USD, particularly the Indian rupee and Bangladeshi taka, directly impacts yard competitiveness. Government policies, such as fluctuating steel import tariffs and VAT rates, further shape the economic equation.

Example:

In late 2023, a depreciation of the Bangladeshi taka by 15% squeezed margin for local yards, temporarily decreasing scrap pricing to international sellers.

ESG and Compliance Pressure

The convergence of investor scrutiny, customer expectations, and legal mandates has moved ESG to the center of ship recycling decision-making. Increasingly, major liner companies, financiers, and even minor owners are prioritizing environmentally sound and socially responsible ship recycling, delivering not only risk mitigation but potentially unlocking ESG-linked financing and premium sales prices.

Global Tonnage Trends: What’s Being Scrapped?

Accelerating Scrappage Rates

The global end-of-life ship market hit an inflection point in 2024 as multiple vessel classes, particularly tankers and bulkers, entered a heavy recycling phase.

Key Data and Trends:

• Clarksons Research reports 25 million gross tons (gt) dismantled globally in 2023, up from 17 million gt in 2022, a 47% increase. More recent BigMint data now indicate that global ship-breaking tonnage dropped by about 19% in 2024 to roughly 1.83 million LDT compared with 2.26 million LDT in 2023, as firm freight markets delayed scrapping.BigMint+1

• Bulk carriers: Dominated scrapped tonnage, reflecting both aging fleets and the rapid implementation of EEXI/CII. More than 30% of bulkers scrapped in 2023 were Panamax-size or larger.

• Tankers: Over 8 million dwt (deadweight tons) of crude and product tankers exited service in 2023 alone, driven by sanctions on Russian oil trades and lower post-pandemic demand.

• Container ships: The segment remains more resilient due to a robust orderbook and continued demand, but early-2000s builds nearing 25 years old are now being phased out.

Macro-Economic Links: Supply Chains in Play

Increased ship recycling tightens active tonnage supply, supporting rates for eco-friendly or newer vessels, while simultaneously flooding steel markets with ferrous scrap. This feedback loop impacts steel mill utilization in destination countries, reducing reliance on raw ore and helping moderate input costs.

Case Study:

During the 2022–2023 steel supply squeeze, Bangladeshi recycling yards supplied over 40% of rebar feedstock for major Dhaka high-rise contractors, underlining the critical role of ship scrap in regional construction sectors.

Regional Shifts and Impact

Ship recycling remains geographically concentrated, but shifts are occurring:

• India: Continues to lead globally, handling 40–45% of scrapped tonnage, now emphasizing “green yard” upgrades for HKC certification.

• Bangladesh: Ramped up investment in yard infrastructure and is preparing for HKC ratification to retain its market share.

• Turkey: Focuses on EU-flagged vessels, offering strict compliance and handling specialized vessels (LPG/LNG carriers, reefers).

Pricing Dynamics: What Is Moving Scrap Values?

Scrap price per light displacement ton (LDT) is the single number that anchors every ship recycling negotiation. You feel it in each call with a cash buyer, in every rebar quote your end market steel mills receive, and in the way owners time their final voyage.

In 2022 and 2023, things moved fast. EU material showed a clear recovery in demolition rates for South Asia and Turkey after the pandemic slump, with typical prices in India, Bangladesh, Pakistan, and Turkey moving from the low 300s to the mid and high 500s in peak months, measured in dollars per LDT.isranetwork.com+1 By 2023 and 2024, BigMint pricing showed container and tanker units in South Asia often changing hands in the 520 to 580 dollars per LDT range, while by late 2025 GMS weekly reports highlight many standard wet tonnage deals in India and Bangladesh slipping below 400 dollars per LDT, with Turkey and EU yards often 150 to 250 dollars lower.GMS Leadership+3go-shipping.net+3Ship Universe+3

Several forces sit under those headline numbers.

Steel and scrap fundamentals

Ship steel competes with other scrap flows. Domestic demolition, construction scrap, and industrial offcuts all influence how much a yard can pay you for a hull. When construction demand in South Asia is strong, rebar and billet prices rise, and yards push their offers higher to secure feedstock. When mills run slower, they cut intake, and your LDT price softens.

NGO and industry data show that beaching countries still cover more than 80 percent of global dismantled gross tonnage, which means their local steel markets act as price makers, not price takers, for ship steel.NGO Shipbreaking Platform+2NGO Shipbreaking Platform+2

The structure of the downstream market matters too. In South Asia, a large share of ship plate is re-rolled and reused directly, which commands more value than melting everything into scrap. In Turkey and many EU yards, a much higher share goes into melting, with more energy use and lower margin. That difference feeds straight back into the gap you see between Chattogram or Alang and Aliaga or EU yards.Wikipedia+1

Currency and interest rates

You cannot look at dollar per LDT in isolation. Yard margins are set in local currency. When the Bangladeshi taka or Pakistani rupee weakens sharply against the dollar, the local cost of imported consumables, labour inflation, and working capital spikes. In late 2023, Bangladesh saw its currency weaken by about 15 percent, which squeezed yard margins and forced a temporary step down in offered prices to international sellers, even though underlying rebar demand stayed firm.Maritime Executive+1

Higher dollar interest rates also matter. Cash buyers who fund purchases with short term credit have to price their cost of capital into each bid. When rates sit higher, they demand a larger spread between yard resale price and what they pay you for the ship.

Yard capacity, orderbooks, and freight cycles

When freight markets are buoyant, owners hold on to older ships for longer, even if they perform poorly on fuel and carbon metrics. You saw that with the 2021 freight spike where many vintage bulkers and tankers received extensions instead of recycling. Once the orderbook delivers enough modern tonnage and rates normalize, scrapping picks up.

UN trade data and market reports show that global ship recycling tonnage in 2024 fell by about 19 percent to around 1.83 million LDT compared with 2.26 million in 2023.BigMint+1 This dip helped keep demolition prices supported, since yards had to compete for fewer ships. As more 15 to 25 year old vessels come off charters in 2025 to 2029, you can expect the opposite: rising demolition volumes, more selectivity from yards, and more spread between prime and marginal candidates.

Regional spreads: South Asia vs Turkey vs EU

Price spreads are now structural, not temporary noise. Several studies and commercial reports show that Turkish yards often pay 90 to 160 dollars per LDT less than Indian yards for comparable tonnage. Some EU listed yards sit 200 to 300 dollars per LDT below South Asia.Wikipedia+3GMS Leadership+3Sustainable Shipping+3

Why do owners still accept that discount in many cases?

• They need EU Ship Recycling Regulation compliance for EU flagged tonnage.

• Their financiers or charterers link lending terms or contracts to high standard recycling.

• Internal ESG policies prohibit sale to yards that do not meet certain audits or certifications.

If you are an owner or trader, your model has to capture this reality. You are often choosing between:

• A higher cash price from a South Asian buyer, potentially with ESG and public relations risk.

• A lower price from a listed or HKC audited yard, with stronger ESG coverage and better alignment with investor expectations.

That choice gets sharper as ESG pressure rises.

ESG Pressure: How It Reshapes Ship Recycling

Two rule sets now sit at the heart of ESG in ship recycling: the Hong Kong Convention and the EU Ship Recycling Regulation. Around them, you have corporate policies from major owners, banks, and cargo interests that go further than the law.

Hong Kong Convention: from paper to practice

The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships enters into force on 26 June 2025. It will apply to ships of 500 gross tons and above that fly the flag of a party to the Convention, and to ship recycling facilities under those states.International Maritime Organization+2Shipping Inbox+2

Key practical points for you as an owner or buyer:

• Every ship within scope must carry and maintain an Inventory of Hazardous Materials across its life, then keep it updated until end of life.

• Ships can only be recycled in facilities that are authorised under the Convention and that prepare a ship specific recycling plan.

• Facilities must show that they handle asbestos, PCBs, heavy metals, and oils safely, with proper worker protection and downstream waste management.

DNV and other class societies highlight that ships in international trade will need an International Certificate on Inventory of Hazardous Materials no later than 26 June 2030.DNV+1 This creates a clear compliance clock. If you wait until the final years of a ship’s life to prepare the IHM, you will face higher costs and limited yard options.

EU Ship Recycling Regulation and the European List

The EU Ship Recycling Regulation goes further for EU flagged ships above 500 gross tons. These ships must be recycled at facilities included on the European List of approved yards. As of mid 2023, that list contained around 48 facilities, mostly in EU, Norway, the UK, plus a handful in Turkey and one in the United States.Environment+2Environment+2

Crucially for pricing:

• No yards in India, Bangladesh, or Pakistan sit on the list yet, although many hold class issued statements of compliance with Hong Kong Convention rules.Wikipedia+2impel.eu+2

Owners who must comply either accept lower demolition prices at listed facilities or reflag their vessels before the last voyage and sell to cash buyers.

NGO reports show that between 2022 and 2023, 889 ocean going ships and offshore units were dismantled, with about 617 sent to South Asian beaches, covering more than 80 percent of global dismantled gross tonnage.NGO Shipbreaking Platform+1 That is despite EU rules and years of scrutiny, which tells you how strong the economic pull of higher prices in South Asia still is.

Corporate ESG policies and concrete price effects

Large shipowners and charterers are not waiting for regulators.

• Frontline, a leading tanker owner, states that vessels should only go to yards on the EU List where the law applies, or to yards certified as compliant with Hong Kong Convention rules.Frontline

• Maersk applies its own Responsible Ship Recycling Standard and reports that it has recycled vessels in Alang and Aliaga with zero recorded safety or environmental incidents, often accepting a lower scrap price to secure higher standards.Maersk+2Maersk+2

For you, this means:

• If you sell an EU flagged or high profile ship to a substandard yard, you face reputational risk, possible NGO campaigns, and tension with lenders or cargo interests.

• If you choose a high standard yard, you likely accept a price discount of 100 to 300 dollars per LDT compared with a top paying South Asian buyer.GMS Leadership+2Sustainable Shipping+2

ESG pressure, in other words, is no longer about public reports alone. It now changes disposal options, contracts, and the final net return on your aging tonnage.

Scenario Analysis: What Could the Next Decade Hold?

You are looking at a sector where structural fleet ageing, climate regulation, and trade tension all collide. The sensible way to think about the next decade is through a few grounded scenarios rather than a single forecast.

Scenario 1: Managed transition with rising compliant capacity

Several studies forecast that global recycling volumes could double from current levels by the late 2020s, reaching around 14 million LDT, then reach roughly 28 million LDT by the early 2030s as ships ordered in the 2010s reach end of life.Sustainable Shipping+1 At the same time, Indian analysis points to national capacity rising to 3.8 to 4.2 million gross tons in 2025, with expected annual growth of around 10 percent in the second half of the decade.ris.org.in+1

In a managed transition, you would see:

• A steady climb in demolition volumes for bulkers, tankers, and early generation containerships as EEXI and CII rules tighten.

• More yards in India, Bangladesh, and Pakistan obtaining Hong Kong Convention certificates and upgrading flooring, waste treatment, and worker safety.BIMCO+1

• The Hong Kong Convention becoming the reference point for most regulators, with EU rules sitting on top for EU flags.impel.eu+1

Pricing in this scenario likely stays in a broad band with South Asia as the top payer, Turkey and EU yards lower, but the gap narrows as more South Asian yards invest in compliance and more buyers pay for traceability and reporting. For you, that means lower ESG risk without giving up all of the South Asia price advantage.

Scenario 2: ESG split and persistent price gap

A second, less tidy scenario is one where the world splits into high ESG and low ESG recycling channels. EU rules remain strict but do not expand globally, Hong Kong Convention enforcement varies by country, and North American or Asian regulators set their own priorities.NGO Shipbreaking Platform+2NGO Shipbreaking Platform+2

In that case, you could see:

• Continued reflagging of ships before recycling to escape EU rules.Wikipedia+1

• An entrenched price gap between EU or Turkish yards and South Asia, with EU list facilities still 150 to 300 dollars per LDT below the top South Asian bids.GMS Leadership+2Sustainable Shipping+2

• Constant political pressure from NGOs, investors, and some regulators as large volumes still head to beaching yards, even as those yards invest in upgrades.NGO Shipbreaking Platform+2BIMCO+2

For you, that means the decision remains binary: price versus ESG. Cash buyers continue to arbitrage the gap, and only a subset of owners accept the cost of high standard recycling.

Scenario 3: Supply shocks and scrap driven steel markets

A third scenario highlights volatility rather than regulation. Here, geopolitics, canal disruptions, and energy prices create swings in freight rates, which in turn change scrappage timing. We already saw this when Red Sea disruptions and war related rerouting created demand for older tonnage that had been lined up for demolition.Maritime Executive+1

In this type of decade, you might see:

• Bursts of high scrapping when freight weakens, followed by dry spells when rerouting needs every available ship.

• Scrap steel from ship recycling acting as a release valve for regional construction sectors during ore or billet supply squeezes.BigMint+1

• Sharp spikes in demolition prices to secure tonnage when yards are empty, and equally sharp corrections when they fill.

If you trade in and out of steel or ship assets, this scenario offers more trading opportunities but also demands tight risk management. If you operate a fleet, it makes your long term disposal planning harder and strengthens the case for early ESG aligned preparations, so you are ready to act when market windows open.

Actionable Takeaways for Buyers and Sellers

The theory only matters if you can use it. The next section gives you practical steps you can apply whether you are an owner, a cash buyer, or a yard that wants better vessels and better margins.

Build a simple, explicit pricing model

Do not rely on “last done” market chatter alone. At a minimum, track for each expected demolition deal:

• Regional scrap steel and rebar price indices for the likely destination market.

• Current currency rate versus the dollar for India, Bangladesh, Pakistan, or Turkey.

• Yard capacity signals, such as reported beachings per month and the number of large units under cutting.

Tie those three blocks into a basic price corridor for your hull type and age. If South Asia is paying 380 to 400 dollars per LDT for standard wet tankers and Turkey sits 150 dollars below that range, you will immediately see the cost of choosing a listed yard for an EU flag versus the extra return of a cash buyer sale.GMS Leadership+3go-shipping.net+3Ship Universe+3

Treat ESG requirements as hard constraints, not soft preferences

If your financiers, board, or charterers expect high standard recycling, treat that as a fixed input, just like deadweight or draft. You then optimize within that box rather than debating each time whether to comply.

Practical steps for you:

• Map your fleet by flag, age, and IHM status. Identify which ships fall under EU SRR, Hong Kong Convention states, or internal policies.Environment+2DNV+2

• Pre qualify a short list of yards and cash buyers that can deliver compliant recycling, including HKC statements of compliance, EU List entries where relevant, and recent audit reports.Environment+2BIMCO+2

• Build ESG clauses into your sale contracts. Require that the vessel is recycled at specified yard types, that IHM and other documentation are kept intact, and that you receive closing reports and photographic evidence when cutting finishes.

Prepare vessels early for compliant recycling

Waiting until the last trading year to think about recycling is now a financial risk. You can reduce that risk by preparing years in advance:

• Maintain and update the Inventory of Hazardous Materials, not only as a tick box, but as a live document that reduces surprises and extra costs at the yard.DNV+1

• Plan cleaning and removal of stores and residues so the ship arrives in a condition that matches yard assumptions. That avoids disputes and price chips on arrival.

• Collect and store certificates, drawings, and inspection records in a structured way so the yard and regulators can process your case faster.

If you do this, you improve the pool of yards willing to quote and shorten negotiation and approval time once you decide to recycle.

For yards: invest where compliance and efficiency meet

If you run or advise a yard, your challenge is to keep or grow volume while meeting higher expectations. Reports show that South Asian yards have already made big investments in impermeable flooring, drainage, and hazardous waste facilities, and that more than 30 percent of global gross tonnage dismantled in 2023 came through Indian yards, with about 46 percent through Bangladesh.Wikipedia+3ris.org.in+3DredgeWire+3

The next wave of improvement will focus on:

• Full Hong Kong Convention compliance with third party audits.

• Better downstream waste tracking, not only on the yard site but through the full chain of buyers and processors.

• Worker health and safety programs that reduce accident rates and can stand up to external scrutiny.

These steps open doors to large owners who now accept lower prices to work only with audited yards. If you can prove high standards and still offer a competitive price, you move to the front of their queue.

For traders and steel buyers: integrate ship scrap into your raw material strategy

If you are a steel mill or scrap trader, ship scrap is no longer a marginal source. In some periods, Bangladeshi recycling yards have provided more than 40 percent of the rebar feedstock for major construction projects.BigMint+1

You can:

• Track expected recycling volumes by segment and region, based on orderbook and fleet age data, so you can plan mill intake and hedging strategies.UN Trade and Development (UNCTAD)+1

• Engage with compliant yards to secure regular plate and scrap flows with traceable carbon footprints, which can support your own climate targets and green product lines.McKinsey & Company+2Fortune Business Insights+2

Conclusion: Sustainability, Pricing, and Strategy on the Same Page

Ship recycling sits at the junction of fleet renewal, steel supply, and ESG scrutiny. The numbers are clear. Most tonnage still goes to South Asian beaches, those yards pay the highest prices, and compliant EU or Turkish facilities sit at a price discount.go-shipping.net+3NGO Shipbreaking Platform+3Sustainable Shipping+3 At the same time, new rules and corporate policies are steadily tightening the space in which you can ignore ESG.

If you are an owner, you need a disposal strategy that treats compliance as a base condition and price as a variable within that. If you are a buyer or yard, you need to balance capital investment in better practices with close tracking of local steel markets and global regulation.

Handled with that level of discipline, ship recycling turns from a one off scrap deal at the end of a vessel’s life into a repeatable, transparent part of your capital allocation and ESG story. That is how you turn this guide into something you and your team can return to each year as the rules, prices, and tonnage shift.