VLCC employment above USD 1 million per day in Week 39 kept roughly 550 merchant vessels flagged for Gulf exit in active service through Q3 2026, leaving recycling yards across South Asia and Turkey with demand but no fresh supply.

That is the central finding from GMS's Q3 review, written by Jamie Dalzell, the cash buyer's Head of Singapore Office. The market entered the quarter expecting a meaningful supply wave. It exited the quarter with buyers still looking for ships that owners had no reason to release.

Why 550 candidates stayed in the water

At the start of July, GMS tracked approximately 550 merchant vessels preparing to exit the Gulf, including roughly 200 bulk carriers. The expectation: tonnage delayed by earlier disruption would gradually move toward recycling as conditions normalised.

That wave did not arrive. By late September, freight and second-hand alternatives had improved enough to keep most of those candidates trading. The Baltic Dry Index climbed to 3,488 by early September, its strongest level since October 2021. Tanker earnings strengthened further as the quarter closed.

The threshold question for each owner became: is the recycling value higher than continuing to trade, selling second-hand, or retaining the asset? For most of Q3, the answer was no.

How much did recycling prices actually move?

The price board moved significantly between Week 27 and Week 39:

• Week 27: Bangladesh led at USD 458–463/LDT (dry bulk) and USD 478–483/LDT (tankers); Pakistan followed at USD 443–448/LDT and USD 463–468/LDT
• Week 34: Pakistan surged to USD 515–520/LDT dry, USD 535–540/LDT tankers
• Week 39: Pakistan at USD 510/LDT dry, USD 530/LDT tankers; Bangladesh USD 500/520; India USD 465/485; Turkey USD 300/310–315

Despite the rise, supply did not respond in proportion. Higher offers did not translate into a higher flow of candidates, Dalzell's report noted.

Bangladesh: the busy waterfront paradox

Chattogram entered Q3 with buyer appetite, financing capacity, and top-of-board pricing. Then heavy rainfall and flooding disrupted yard operations and beaching activity through much of July.

As conditions improved, previously delayed vessels moved through the beaching windows. By September, the waterfront was progressively busier.

But end buyers struggled to replace that tonnage with new purchases. The lesson, Dalzell observed, is that arrivals and deliveries reflect transactions concluded earlier — not the health of the fresh-sales market.

Pakistan: pricing power from scarcity

Gadani entered Q3 behind Bangladesh. By Week 34, it had overtaken, with GMS indications of USD 515–520/LDT for dry bulkers and USD 535–540/LDT for tankers.

What made the move interesting was timing. The price rise came before enough tonnage actually reached the waterfront. Yards were competing for a limited future supply. As previously purchased tonnage arrived in late August and September, urgency eased and pricing corrected from the peak.

Pakistan still ended the quarter in the leading conventional pricing position on the subcontinent.

India: two markets, not one

On the conventional price board, Alang stayed behind Pakistan and Bangladesh for most of Q3.

Specialist demand told a different story. Reefers, gas carriers, passenger vessels, green ships, and non-ferrous-rich units generated a separate buying response. By Week 39, GMS described Alang as effectively operating two markets: conventional steel tonnage on one side, specialist or compliance-sensitive vessels on the other.

Two Indian recycling facilities were also proposed for inclusion on the European List of Ship Recycling Facilities during the quarter, pending at period end. International shipping associations later backed the additions.

Turkey: a different competitive lane

Aliaga remained well below South Asian pricing through Q3, with GMS indications reaching USD 300/LDT (dry bulk) and USD 310–315/LDT (tankers) by Week 39.

The gap reflects a different business model. Turkey depends more on geography, European regulatory access, specialist vessels, and Basel-compliant trades than on matching conventional South Asian prices.

Compliance is now part of price

Q3 reinforced how sanctions exposure, ownership histories, registries, and previous trading activity shape the realistic buyer pool. A serious safety incident at a Bangladeshi yard in August and continued HKC implementation across major destinations added to delivery complexity.

A higher headline offer matters only if the transaction can clear regulatory, sanctions, operational, and delivery requirements, Dalzell wrote.

Q4 outlook: supply stays tight, backlog builds

Dalzell expects the Q3 imbalance to persist into Q4. Strong freight, including continued Hormuz-related employment premiums, gives ageing vessels a reason to keep trading.

Every vessel that stays in service beyond its potential recycling point adds to a backlog. If freight eventually normalises, that deferred supply could reach yards within a much shorter window. Until then, limited availability is likely to keep recycling prices supported across Pakistan, Bangladesh, and India.