Bulk Carrier Recycling in 2026: More of the Same?

Bulk carrier recycling has lingered in the doldrums since 2017. Despite repeated talk of ageing tonnage and a pent-up scrap pool, 2026 may once again fall short of the long-anticipated pick-up.

Rates have settled into a new normal, comfortably above pre-Covid levels. At this range, recycling barely features in owners’ decision-making. History shows that scrapping typically requires two conditions: weaker rates and a widespread expectation that the softness will persist. Neither is currently in sight.

Older tonnage has found other outlets. Plenty of employment opportunities exist above breakeven levels, while the S&P market still offers values well above scrap. Many of these ships are debt-free and even those carrying debt continue to operate profitably leading to minimal recycling year after year.

A sudden political or economic shock could, in theory, force owners to recycle tonnage en masse. Dry bulk has historically been more insulated from daily geopolitical tremors than other sectors, but 2025 demonstrated that global politics are increasingly relevant. At present, only a few such developments appear on the horizon, but none seems capable of generating recycling on a scale that would meaningfully offset deliveries.

Red Sea re-opening: A gradual resumption of transits would have only a marginal effect on geared segments. Capesize and Kamsarmax tonne-miles could decline, but the impact is unlikely to be dramatic, largely because the affected routes are not particularly cargo-intensive.

End of Russia-Ukraine war: Rather than depressing demand, the end of the war could open new employment opportunities for older geared vessels in Med/Black Sea trades linked to Ukraine’s reconstruction. A partial redirection of Russian coal to Europe might weigh on Capesize and Kamsarmax tonne-miles, but it may not be enough to spark a wave of recycling in the medium term. Sentiment may be less impaired, supported by expectations of increased Black Sea grain availability.

Oversupply: The Capesize delivery schedule will remain historically on the low side in 2026. Sub-cape deliveries are substantial, but not comparable to the overwhelming oversupply seen in 2010 or 2015-16. They could exert pressure if trade growth disappoints, yet any uplift in recycling would likely be modest rather than transformative.

If not that, then what? Possibly a black swan event, although, by definition, such shocks cannot be forecast.

Or perhaps a slow burn. The fleet continues to age and eventually the age profile reaches a point where even a decent freight market can no longer delay more meaningful recycling. We are not there yet. Meanwhile, more ships continue to join the fleet. On their own, these additions may look manageable, but over time they accumulate, quietly nudging the market toward the kind of overcapacity that could finally prompt a step up in recycling.

The pieces are in place for a busier demolition cycle later in the decade. But in 2026, barring a major surprise, little might change. The market isn’t forcing owners’ hands and until it does, recycling is likely to remain muted and largely irrelevant to net fleet growth.

By Alexandra Alatari, Senior Analyst, Sale & Purchase, SSY