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Scrapping rates
What it is
The pace at which old vessels are sold for recycling, which removes supply from the market. Owners scrap when freight rates are poor, the vessel needs expensive survey work, or environmental rules make it uneconomic
India holds around 30% of the global shipbreaking market and is the third-largest recycler by tonnage
Impact on industries
- The market's self-correcting mechanism - weak rates accelerate scrapping, which tightens supply and eventually restores rates
- For India it is a substantial industry in its own right, with the world's largest facility at Alang, and it supplies secondary steel
- Scrapping slows precisely when rates are strong, so supply discipline is weakest exactly when the market can least absorb it
- Tightening recycling standards under the Hong Kong Convention raise compliance cost and could shift tonnage between recycling nations