Trade Storms Spark Financial Tsunamis
The global economy was swept into a tempest this past week, marked by a maelstrom of tariffs, retaliations, and policy reversals that have left ship recyclers across the Indian sub-continent teetering on edge. What began as a sudden announcement of widespread U.S. tariffs escalated into a global financial shake-up. Major stock markets plunged by nearly 20%, leading to a colossal loss of over USD 11.2 trillion. Investors scrambled as the situation worsened, until a last-minute announcement from the Trump administration of a 90-day suspension on most tariffs reversed some of the damage, triggering a mild 10% recovery.
Yet, damage was already done. The European Union and China retaliated with equal ferocity, China imposed 125% duties, while the United States matched back with 145% counter-tariffs. The unpredictability of these aggressive trade actions sent shockwaves across industries, particularly steel and ship recycling.
Panic Button: U.S. Bond Sell-Off & Policy Flip-Flops
The Trump administration’s sudden U-turn is reported to have been sparked by a massive sell-off of U.S. Treasury Bonds by Japanese markets, which are considered the financial lifeline of the U.S. Federal Government. This sell-off rattled investor confidence and forced the administration into a state of panic, leading to a sequence of inconsistent, often contradictory policy changes throughout the week. These erratic decisions have made it difficult for recyclers and steel traders to plan even for the near-term.
With the 90-day suspension now ticking, recyclers know this is only a temporary relief. The steel trade, already weakened by overproduction in China and price manipulation, may not recover fast enough before tariffs are reimposed. The sub-continent's recyclers now live in a countdown phase, preparing for the worst.
Oil Price Wobble Adds to the Worries
While trade policies trembled, crude oil prices danced to their own volatile rhythm. Brent crude dropped sharply mid-week to USD 56/barrel, its lowest since the 2020 pandemic-era slump, before ending the week at USD 61.50/barrel. Analysts foresee continued weakness in prices, especially as OPEC+ reaffirmed its plan to boost oil output despite slowing global energy demand. This decision, though favorable for importing nations like India and Bangladesh in terms of operational costs, still paints a gloomy picture when tied with other macroeconomic factors.
On the currency front, the U.S. Dollar surged temporarily against currencies like the Indian Rupee, Pakistani Rupee, and Bangladeshi Taka, only to settle back down later in the week. Interestingly, the Turkish Lira, which has been in deep crisis, posted modest gains against the greenback, hinting at how wide-ranging the global currency flux is.
Tonnage Trickles: Uneven Distribution Across Regions
In terms of real recycling activity, the disparity among the sub-continent nations was stark:
• India recorded an unprecedented ‘empty report’, with virtually no incoming tonnage at its Alang yards, likely a result of global trade slowdown and unclear pricing trends.
• Pakistan emerged as the unexpected leader, securing the highest number of scrap vessel arrivals across the sub-continent.
• Bangladesh stood cautiously in the middle, having some incoming deliveries but waiting for clarity on yard upgrade policies.
• Turkey remained passive, refraining from aggressive bidding, most likely due to internal inflation and weak demand.
This erratic tonnage distribution further amplifies the current instability. Lack of tonnage translates to idle yards, unpaid labor, and cash flow crises for many small-to-medium recyclers.
Bangladesh Awaits Crucial HKC Extension
For recyclers in Bangladesh, another storm brews in the form of the Hong Kong Convention (HKC) compliance deadline. The official cutoff for full compliance is June 26, 2025, and many yards still lag behind on infrastructure upgrades. Facilities expecting new deliveries in the upcoming tides have been running behind schedule for installing safety systems, green recycling facilities, and waste management protocols.
Though the March 31 deadline for preliminary compliance passed recently, hopes are high that the Ministry of Industries, after returning from the longest Eid holiday on record, will announce an extension in the coming week. The file has been handed over to the newly formed Ship Recycling Board, which is expected to play a coordinating role going forward.
What Lies Ahead for 2025?
With all indicators pointing to a turbulent few months ahead, 2025 may mark a paradigm shift in the global ship recycling industry. If the Trump administration reimposes tariffs after the 90-day pause or if long-term tariffs become institutionalized, several small ship-recycling firms may be forced to shut shop permanently. Worse yet, if a significant number of South Asian yards fail to make the HKC cut, the region could see a sharp contraction in available recycling capacity.
This domino effect may result in steel glut, underutilized yards, and plunging freight rates—not to mention rising unemployment in regions where ship-breaking is a major livelihood source. The pressure is now on governments, recyclers, and global policy architects to bring order to this trade tempest.
Key Takeaways:
• Global stock markets fell by 20%, losing USD 11.2 trillion, then regained 10% after tariff suspension.
• China imposed 125% duties, while U.S. countered with 145% tariffs.
• Sell-off of U.S. Treasury Bonds by Japan sparked panic in the Trump administration.
• A 90-day tariff suspension offers brief relief to ship recyclers but uncertainty looms large.
• Oil prices dipped to USD 56/barrel, ended at USD 61.50/barrel, future dips expected as OPEC+ boosts output.
• U.S. Dollar surged, then settled; Turkish Lira posted unexpected gains.
• India reported an ‘empty’ week, Pakistan led in tonnage intake, Turkey stayed inactive.
• Bangladesh awaits HKC extension, deadline for compliance is June 26, 2025.
• Failure to meet HKC standards could lead to mass closures of shipyards.
• Steel pricing volatility & energy costs are major concerns ahead.
• Long-term tariff enforcement could severely shrink ship recycling capacity in the Indian sub-continent.
