South Asia: Bangladesh, Pak ship recycling markets struggle; India remains stable w-o-w

• Alang sees robust sales despite weakening rupee
  
  
• Shrinking dollar reserves impact Pak, Bangladesh
  
  

This week, South Asian ship recycling markets showed mixed trends. Alang's market remained stable with strong demand for vessels compliant with the Hong Kong Convention (HKC), while Pakistan struggled due to low prices and economic instability. Bangladesh faced challenges from high inflation, currency weakness, and limited yard capacity.

India's Alang market remains stable, driven by high HKC demand

This week, the Alang ship recycling market remained relatively stable and active, continuing to absorb a large share of HKC-only container sales despite competition from a Bangladeshi yard. However, slower economic growth, a weakened Indian rupee, and struggling steel tags put pressure on Alang's pricing.

Nonetheless, even though prices were below the coveted $500/light displacement tonnage (LDT) mark, they were accepted by sellers. This kept the market active, with several midsized vessels being processed.

Consequently, Alang continued to lead in domestic deliveries and maintained its position as the second-largest player in global ship recycling, particularly in the HKC tonnage market.

Meanwhile, the ruling party at the Centre recently strengthened its hold over Maharashtra, a core economic zone in India, with a sweeping victory in the state elections. However, it remains uncertain whether this will accelerate the state's infrastructure development.

The total tonnage received at Alang Port this week was 39,083 LDT. In the previous week, 39,652 LDT were received.

Pakistan market struggles amid low demand

Pakistan's ship-breaking market struggled again this week, unable to compete with India and Bangladesh. Gadani's prices remained low, with no new deliveries for over a month. The instability of the Pakistani rupee and cheaper Chinese steel imports also adversely impacted the market.

Sellers faced unrealistic pricing, with some ships priced as low as $440/LDT amid subdued demand. The pending IMF loan and shrinking GDP have caused the lowest recycling volumes in decades. A shortage of US dollars and the inability to upgrade yards to HKC standards are also limiting Gadani's competitiveness.

Although this week saw slightly increased demand from some buyers, it was not enough to secure ships. Until domestic yards meet HKC standards, Pakistan's ship recycling market will continue to face challenges, and recovery in 2025 seems unlikely.

No tonnage was received at Gadani Port this week. Last week also saw Pakistan failing to secure any tonnage.

Bangladeshi recyclers face challenges amid economic pressures

Bangladesh's ship-breaking market struggled again this week amid a stalled economy and high inflation, although it recorded higher tonnage w-o-w. Only one large bulk carrier arrived, with the market being weighed down by limited buyers, yard capacity, and financial resources.

In recent times, fluctuating prices have made it difficult for local recyclers to secure deals. Once a global leader, the market is now facing uncertainty, given the slowdown in activity.

Additionally, the country's declining US dollar reserves have made it unlikely for recycling yards to meet HKC standards by mid-next year, limiting recyclers' ability to bid on ships. A weakening taka, shrinking GDP, high inflation, and a downgraded banking sector suggest that Bangladesh's ship recycling market will continue to face challenges into 2025.

The total tonnage received at the Chattogram Port this week rose to 36,386 LDT compared to 26,660 LDT in the previous week.