South Asia: Bangladesh, Pakistan's ship recycling markets face strain as HKC compliance deadline nears

• Pakistan continues to see nil vessel arrivals
  
  
• Low arrivals, falling offers pressure Alang
  
  

South Asia's ship recycling markets witnessed mixed conditions in week 5 of CY'25, with India and Bangladesh seeing higher tonnage w-o-w, while Pakistan's yards remained deserted.

However, while the tonnage received at India's Alang was higher w-o-w, the port saw fewer vessel arrivals and declining offers, with bulker prices at $440/LDT. Additionally, Pakistan and Bangladesh remained under strain due to economic instability and compliance issues with the Hong Kong Convention (HKC), though Bangladeshi yards fared better, with steady arrivals.

Bulker sales dominate India's Alang market

India's ship recycling market was subdued in week 5, with offers under pressure despite there being demand. Far Eastern vessels were the focus of most negotiations, but declining offers from buyers from Alang led to fewer fixtures. Shipowners were hesitant, facing prices below the preferred USD 450/light displacement tonne (LDT) for bulkers.

At Alang, vessel arrivals were lower, with only one sale pushing the total tonnage received to over 51,000 LDT. This reflects strain on Indian recyclers, as Alang's capacity remains underutilised compared to Chattogram.

Additionally, while steel plate tags improved slightly to $458-460/LDT, prices were at the same level or marginally above the offers made by recyclers in the local market, which led to losses on their part. The Indian rupee also showed a slight recovery, but the overall market remained cautious.

However, the sale of MARTHA OPTION at $650-660/LDT demonstrated that attractive deals are still possible.

According to a market participant, "the current asking price for bulkers is at around $440/LDT, with bulkers leading the market in terms of tonnage availability. Meanwhile, the container and tanker markets remain largely stable compared to last week, with prices fluctuating slightly within a $5/LDT range depending on the specific specifications of the ships."

In week 5, Alang Port received 51,187 LDT, up from 48,085 LDT in the previous week.

Pakistan faces pressure with nil HKC-certified yards till now

In week 5 of CY'25, Pakistan's ship recycling industry remained under pressure, with the HKC deadline fast approaching. With no Gadani yard certified for compliance, recyclers are at a disadvantage, limiting their ability to compete for HKC-compliant units and negotiate deals post-30 June 2025. This could lead to a further reduction in the flow of tonnage to Pakistan.

Moreover, economic instability, including stagnant steel plate prices and a fluctuating Pakistani rupee, continued to dampen the market. Trade deficits and inflation further weakened prospects, with a slowdown expected in early 2025 unless financial aid is secured.

Gadani recyclers must urgently upgrade their yards. If not, Pakistan's ship recycling sector risks facing a prolonged period of uncertainty.

Gadani Port saw no vessel arrivals in week 5. The port has remained empty for the last 4.5 months.

Bangladesh sees steady arrivals ahead of compliance deadline

In week 5 of CY'25, Bangladesh's ship recycling market saw steady vessel arrivals, particularly from the Far East, though the market remained subdued due to ongoing economic challenges. A weakening Bangladeshi taka and stagnant steel prices weighed on market activity, with steel trade between recycling yards and local mills at a standstill.

Economic difficulties, including delayed infrastructure projects and unresolved financial aid, continued to strain growth. The government is pressing recyclers to meet the HKC compliance deadline, with yards failing to upgrade by 31 January at risk of losing no objection certificates (NOCs).

Despite these obstacles, Bangladesh remained a key player in the global ship recycling landscape, with demand for Panamax bulkers and LNG carriers. However, the market was cautious, as unsold high-priced vessels held by cash buyers limited price increases and impacted overall momentum.

Over 61,586 LDT arrived at Chattogram Port in week 5. The previous week saw arrivals of 48,545 LDT.