South Asia: Economic slowdown, regulatory pressures weigh on ship-breaking sector in Bangladesh, Pakistan

• India's ship recycling market remains subdued post Budget
  
  
• Chattogram witnesses brief lull amid the Chinese New Year holidays
  
  

South Asia's ship recycling markets witnessed subdued conditions in week 6 of CY'25. The Indian market faced a slowdown due to fewer tonnage arrivals and a weak budget impact. Pakistan's sector struggled with limited progress, and Bangladesh experienced instability amid political and economic uncertainties. All regions grappled with challenges, with weak steel prices and upcoming regulatory deadlines.

Alang market faces slowdown

India's ship recycling market remained subdued in week 6, with local offers declining to $456/LDT and the Indian Rupee weakening against the US Dollar. The market slowdown was mainly due to fewer tonnage arrivals from traditional sources, with most coming from Far Eastern waters. As a result, Alang saw only one large-LDT arrival in the first week of 2025, and local anchorage LDT surged, which is a rare occurrence.

India's ship recycling sector is ready for Q3CY'25, with yards meeting HKC SoC standards and no immediate need for loans. However, Trump's tariffs on Chinese steel could disrupt steel prices, and geography will be crucial in determining vessel destinations.

According to a market participant, following the budget announcement, the market is not gaining the expected momentum. In fact, it appears to be losing any remaining hope for recovery, leaving participants uncertain.

Another participant noted that the market has lost momentum after the budget. Expectations of an increase in safeguard duties were not met, as the reduction instead negatively impacted the market. This has resulted in a decline in sentiment and a halt in deal-making, leaving the market inactive.

Current offer levels:

Dry bulk carrier: $440-445/LDT

Container: $480-485/LDT

Tanker: $445-455/LDT

In week 6, Alang Port received 73,048 LDT, up from 51,187 LDT in the previous week.

Pakistan's market struggles amid limited progress

In week 6 of CY'25, the Pakistani ship recycling sector faces challenges as offers from Gadani stay close to India's levels, but recyclers need to be proactive to stay competitive beyond 1 July 1st, with mandatory HKC compliance. With limited progress in upgrading yards to meet Hong Kong Convention standards, Pakistan may face another tough year.

Pakistani recyclers need to be strategic with their bids, even offering above the market price to secure the right units. However, the lack of government action and a continued drought in arrivals are hindering progress. The weakening Pakistani Rupee and stagnant steel prices are adding further pressure, and the potential influx of cheaper Chinese steel could worsen the situation.

Gadani Port saw no vessel arrivals in week 6. The port has remained empty for the last four-five months.

Challenges facing Bangladesh's ship recycling sector

Last week, Chattogram's ship recycling market saw a brief lull during the Chinese New Year, with a significant influx of Panamax bulk carriers from Far Eastern owners and a drop in offer prices by $30/LDT, making tonnage hard to secure. The market remains unstable due to political and economic uncertainty, including delays in infrastructure projects and stagnant steel prices.

Steel plate prices are at $529-530/LDT, with a slight strengthening of the Taka against the US Dollar. However, conditions remain weak, and the BSBRA has requested an extension to meet HKC standards before June. February is expected to be challenging for the Bangladesh ship recycling market.

Over 104,446 LDT arrived at Chattogram Port in week 6. The previous week saw arrivals of 61,586 LDT.