South Asia: Bangladesh, Pakistan's ship recycling markets struggle; India shows stability

• Alang sees strong activity despite tonnage scarcity
  
  
• Pak, Bangladesh face inactivity, limited arrivals
  
  

This week, South Asian ship recycling markets showed mixed trends. Alang demonstrated resilience, with strong activity despite a tonnage shortage. Pakistan's market remained inactive, with no vessels having arrived at Gadani for several weeks. Bangladesh saw a subdued market at Chattogram Port, impacted by political instability and economic challenges.

India's Alang remains robust despite tonnage shortage

This week, Alang's ship recycling market showed strong performance, with anchorage of over 50,000 light displacement tonnage (LDT), including large oil rigs. However, many yards were dormant due to the ongoing scarcity of ships.

Nonetheless, despite limited tonnage supply, the market remains resilient.

Domestic challenges continued to impact recyclers this week, with steel plate prices stagnating at $468/tonne (t). The Indian rupee weakened further against the US dollar, having recorded a cumulative decline of nearly 1.5% this year. Consequently, local offers for ships have dropped significantly over the year, from nearly $600/LDT to around $450/LDT, causing shipowners and cash buyers to exercise caution.

However, signs of recovery are emerging as tonnage quality and quantity improve. Local prices are stabilising, with rising vessel demand and optimism surrounding the onset of 2025, driven by expectations of post-New Year price increases.

The total tonnage received at Alang Port this week was 52,029 LDT. In the previous week, the port recorded trades of 39,083 LDT.

Pakistan struggles with lack of tonnage

Pakistan's ship-breaking market struggled again this week, amid weak fundamentals and a sluggish economy. Gadani Port has been inactive for almost six weeks, with no vessels arriving.

This week saw local recyclers disinterested due to limited supply, with many ships being diverted to Alang for higher payouts. Steel plate prices dropped by $10/t w-o-w, and the Pakistani rupee weakened. Limited US dollar availability and issues with letters of credit hindered negotiations, causing hesitation among shipowners and buyers.

The IMF's $7 billion loan could provide liquidity and help recyclers upgrade yards for Hong Kong Convention (HKC) compliance by 2025. However, with limited tonnage, Pakistan's market is likely to stay quiet into 2024-end.

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

Bangladeshi faces decline amid political instability, economic woes

Bangladesh's ship-breaking market faced a downturn this week amid worsening economic conditions. Chattogram saw limited activity, with only one 7,000 LDT vessel arriving and no deliveries. Additionally, local recyclers were hesitant to bid, affected by ongoing riots and political instability.

Non-HKC and liquefied natural gas (LNG) carrier sales offered some activity, but ship recycling prices remained below $500/LDT.

This year, steel plate prices have dropped by $100/t to $521/t, and the taka has devalued by over 8.5%. Corruption in domestic banks has tightened dollar reserves, making ship purchases difficult. As a result, many smaller recyclers have been forced to shut down operations.

The total tonnage received at the Chattogram Port this week stood at 16,952 LDT compared to 36,386 LDT in the previous week.