GMS Week 36: Strikes Return and Freight Soars

Weekly Demolition Reports — 05/09/2026

The sanctions package announced last week barely had time to settle before hostilities resumed. Renewed U.S. strikes and Iranian retaliation brought the recent lull to an end, while commercial traffic through the Strait of Hormuz again ran below pre-conflict levels. The strait handles a substantial share of globally traded oil and liquefied natural gas, so even partial disruption feeds directly into voyage planning and war-risk insurance costs across the region. For recycling candidates positioned in the Gulf, the immediate risk has shifted back from sanctions paperwork to passage, insurance, and physical security. The strait is functioning; normality is not.

Oil prices followed the escalation. Brent traded near USD 95.7 and WTI around USD 91.6 on Friday, up roughly 7% and 10% respectively on the week and reversing the previous week's retreat. The market has absorbed repeated disruptions, but the inventory cushion is no longer being treated as infinite. Higher crude raises voyage and import costs across the basin just as buyers become more selective, which matters for recycling yards that depend on imported cutting fuel, energy, and steel-handling inputs priced off oil.

Dry bulk freight delivered the clearer message for recycling. The Baltic Dry Index climbed to 3,488 on Thursday, its strongest reading since October 2021, with Capesizes at 6,042 and Panamaxes at 2,457. The index tracks rates for shipping dry commodities such as iron ore, coal, and grain, and when spot earnings rise, older vessels that might otherwise head for demolition can earn more trading than their scrap value. The rise is broad enough to keep ageing bulkers trading and owners patient. Last week's principal supply constraint has strengthened rather than eased: the beach is bidding against daily earnings, and daily earnings are winning.

Currencies moved in different directions. The Indian Rupee strengthened to around 94.49 against the Dollar, meaningful support for Alang's purchasing power, while the Pakistani Rupee held near 277.42 and Bangladesh Bank's latest available spot reference firmed to around 122.79. The Turkish Lira weakened through 48.4. Pakistan's August inflation reaccelerated to 11.1%, while Turkey's annual figure edged lower to 31.51%. Because scrap vessels are typically priced in dollars while yard revenues are in local currency, exchange-rate moves directly shift how much competing beaches can bid. The basin's macro picture is mixed, but India received the cleanest local tailwind.

At the beaches, physical activity continues to outpace fresh business. Several units that had been sitting in the pipeline have now converted into deliveries, and Gadani has added more hulls to its waterfront. Yet no fresh market sales were reported. Bangladesh and Pakistan have both cooled as the hottest buyers satisfied immediate requirements, while India is improving from below. The distinction remains critical: tonnage is moving through the beaches, but owners are not yet feeding the next cycle, and a thin sales pipeline tends to keep competition among yards concentrated on fewer available units.

The Bangladesh investigation left open last week has now reported. The Ministry of Industries inquiry identified shortcomings in safety supervision and gas-testing coverage around ballast-tank work, including hydrogen sulphide risk, and recommended action under existing rules together with tighter recycling certification expectations for vessels flying non-HKC flags. Hydrogen sulphide, a toxic gas that can accumulate in ballast and slop tanks, has long been a recognised hazard in ship breaking, and ballast-tank work has featured in past yard accidents across South Asia. The legal process now follows. For the wider industry, the important consequence is procedural: a formal lesson is becoming a new checklist, and how Bangladesh enforces it will be watched closely as the sector continues its push toward Hong Kong Convention-compliant operations ahead of the convention's entry into force.

September therefore opens with Pakistan still leading but no longer paying August urgency, Bangladesh lower as first-tier demand is covered, and India moving in the opposite direction with firmer fundamentals and better appetite. Freight is keeping potential candidates trading, the Gulf remains operational but risky, and fresh supply is still the scarce commodity. The yards have been fed; the sales list has not. The coming weeks' watch points are whether the Hormuz disruption pushes any Gulf-based owners toward earlier recycling decisions, and whether any fresh sales emerge once freight or currency conditions shift.

For Week 36 of 2026, GMS Market Rankings and vessel indications are provided below.

Source: GMS, Inc. —