Ship Recycling Yards Are Waiting for a Boom as Old Tankers Keep Sailing

The breakers on the beaches at Alang, Chattogram and Gadani have the cash and, since last year, the paperwork. What they don't have is ships. Clarksons Research counts 273 vessels sold for recycling in the first nine months of 2026, about 5.5 million gross tons. That is 13% below the same stretch of 2025 and roughly 60% under the normal pace of the 2000s and 2010s. For five years running the industry has scrapped less than 0.5% of the world fleet a year, the longest run that low since the early 1970s.

Meanwhile the fleet keeps getting older. More than 340 million gt is now 20 years old or more, close to a fifth of all tonnage and up from 12% in 2021. A record 68 million gt is past 30. Tankers have aged fastest: 22% of tanker capacity is over 20 years old, against 8% five years ago. Those are the ships the recycling trade has been told to expect for three years now. Most of them are still at sea, and many are earning more than they ever have.

So the boom everyone forecast is real on paper and missing on the beach. The reason is simple. Freight pays more than steel.

Why the old tankers aren't going to the beach

The ClarkSea Index, Clarksons' average of earnings across the main ship types, hit a record $84,951 a day in the week to October 9, its fifth all-time high in a row. Some VLCC fixtures went above $1 million a day in late September as the Hormuz crisis forced Saudi and other Gulf crude into ship-to-ship transfers and long detours (we covered the record VLCC earnings and the newbuild rush that followed). A 1999-built Aframax of about 17,000 LDT is worth roughly $8 million to a Bangladeshi breaker at today's prices. Good money. An owner still earning tanker rates like these won't take it.

Dry bulk tells the same story. The Baltic Dry Index touched 3,488 in early September, its highest since October 2021. Cash buyer GMS summed up the third quarter bluntly: the yards were ready to buy, and the ships still had somewhere else to go. In early July GMS was tracking about 550 merchant ships preparing to leave the Gulf, around 200 of them bulk carriers; that tonnage went straight back into a tight market.

Prices haven't been the problem. Scrap steel on the Indian subcontinent is up 20% to 25% this year, by Clarksons' count. GMS indications for late September put Pakistan at about $530 per light displacement ton (LDT) for tankers and $510 for bulkers, Bangladesh at $520 and $500, and India's Alang at $485 and $465. Turkey's Aliağa, which buys on European steel prices, sat around $262 to $284 per LDT. A weekly report from Dubai-based Best Oasis for the week to October 2 had Bangladesh paying $510 for tankers and Pakistan $490, with Pakistan's buyers described as close to saturated after paying high for the few ships they'd secured. That's a market with buyers fighting over scraps.

Drewry put a number on the tanker drought in June: only about 52 crude tankers went for demolition across 2022 to 2026. Its call is that scrapping stays quiet this year, picks up a little in 2027 as rates come down, then jumps in 2028 once the orderbook (25% of the crude fleet by May) lands on a softer market.

Who is actually being scrapped

The ships that do reach the beach are a telling mix. Through mid-August, Clarksons had tanker demolition at about 2.7 million dwt for the year, and 58% of tanker sales for scrap were sanctioned ships: 22 tankers of 1.8 million dwt in all. These are the oldest units of the shadow fleet, ships too old or too exposed to keep trading even in the grey market. Xclusiv Shipbrokers counted 927 sanctioned tankers in June, about 11.6% of the tanker fleet, with 441 of them aged 21 to 25. Most of that fleet hasn't come anywhere near a breaker yet. (Our earlier post on Europe's shadow fleet seizures covers where those ships trade now.)

Sanctioned tonnage also changes who can buy it. Ownership history, flag hops and trading records now decide which yard will take a ship and at what price. The NGO Shipbreaking Platform says some dark fleet tankers reached Indian beaching yards in 2025 paid for with cash, crypto and third currencies. Best Oasis noted in October that demand at Alang leans heavily on sanctioned and specialised units such as drilling rigs.

Containerships are coming back slowly. About 25,000 TEU had gone for recycling by August, up from 5,300 TEU at the same point last year. That's still tiny next to the overhang. BIMCO reckoned last October that at least 500 boxships of 1.8 million TEU are overdue for scrapping, and up to 850 ships if rates fall the way they did in the 2010s. With the orderbook above 40% of the fleet (see our orderbook post) and lines drifting back to Suez, broker Braemar expects boxship scrapping to accelerate through 2027.

The last steady stream is old steam turbine LNG carriers. Lloyd's List counted 17 of them scrapped in 2025, a record, and Clarksons had six more sold by August this year. They burn too much fuel to compete with modern two-stroke ships at any charter rate.

For context, 2025 was a better year for the yards by weight. Lloyd's List Intelligence put it at 7.9 million gt from 298 ships, up 65% on 2024 in tonnage, the most since 2021. This year is running below it.

New rules, same beaches

The Hong Kong Convention came into force on June 26, 2025, after 16 years waiting for ratifications. It sets standards for yards and requires an inventory of hazardous materials on every ship. In practice it has blessed the beaches. More than 110 Indian yards hold Statements of Compliance issued by classification societies, and Bangladesh has authorised 23 yards, BIMCO said in July. India, Bangladesh, Pakistan and Türkiye, all now parties, hold most of the world's recycling capacity. India's share of global ship recycling rose to 35.4% in 2025 from 30.1% a year earlier, by UNCTAD's count.

The EU Ship Recycling Regulation is stricter. EU-flagged ships must go to a yard on the European List, which has so far meant yards in Europe, Türkiye and one in the US. In July the European Commission proposed adding two Alang yards, Shree Ram and YSI Recyclers, which would be the first South Asian yards on the list. Eight shipping groups wrote to EU ministers in September urging approval. Six groups on the other side, including the NGO Shipbreaking Platform, Eurofer and Transport and Environment, want the proposal withdrawn because the yards still cut ships on tidal mudflats. The fight had not been settled by late September. The money behind it is plain: EU yards and the Turkish ones can't match South Asian prices, and owners can reflag before a sale to dodge the rule anyway.

The safety record is why the argument won't go away. The NGO Shipbreaking Platform counted 11 deaths and at least 62 injuries in South Asian yards in 2025. In Bangladesh, the labour institute BILS logged 28 accidents and three deaths in the first half of 2026, nearly double the accidents of a year earlier. Then on August 14 a toxic gas leak in a yard at Sitakunda, near Chattogram, killed nine workers. A government inquiry found weak supervision and poor gas testing in ballast tank work. Aliağa, the EU-approved option, had three fatal accidents in the months before the Platform's report and a fire aboard the FSO Sloug, and local officials found illegal dumps holding about 15,000 tons of hazardous waste from the yards.

What tips the balance is the freight market. CII ratings tighten every year, EEXI limits engine power, and EU emissions costs now land on voyages to and from Europe; all of that makes an old ship dearer to run. None of it outweighs $80,000 a day. When rates turn, Clarksons and GMS both expect the backlog to hit the beaches fast, and the yards that have spent on Hong Kong Convention upgrades will get the volume they've been promised. For now the breakers wait. The ships keep sailing.

For the freight capacity and policy side of the same story, see Transportational.