South Asia: India's ship recycling market under pressure on lack of support from recent Budget

This week, the South Asian ship recycling market experienced a mix of challenges and resilience. In India, the ship recycling sector was impacted by the FY25 Budget, which, while focusing on welfare and infrastructure, lacked specific support for the industry. This oversight led to a decline in local steel plate prices and a weakening of the Indian rupee. Despite these issues, Alang Port welcomed a South Korean-built reefer, providing a rare boost amid broader market struggles. In Pakistan, the Gadani market showed notable strength, benefiting from stable domestic conditions and a slight appreciation of the Pakistani rupee. Gadani stood out positively against its struggling regional counterparts, with local recyclers managing to handle significant tonnage.

Conversely, Bangladesh's ship recycling market faced severe disruptions due to violent unrest, communication blackouts, and a challenging monsoon season. These factors led to a significant drop in local prices and stalled trading, leaving the market subdued amid ongoing crises.

India

This week, India's ship recycling market faced challenges following the announcement of the FY25 Budget. While the Budget focused on middle-class welfare, employment, and youth opportunities, it neglected specific support for the ship recycling sector. This lack of direct measures, such as duty reductions, disappointed Alang recyclers. Consequently, local steel plate prices fell by $4/t, continuing their recent decline. The Indian rupee weakened further to 83.75, adding to the sector's woes. However, significant infrastructure projects worth $135 billion are in the pipeline, with $65 billion allocated for roads and railways, marking an 11% increase from the previous Budget.

Notably, a reefer was heard to have been arrived at Alang port, with an additional booking of a South Korean-built reefer (ICE RUNNER), fetching around 6,939 LDT at $615/LDT due to its aluminium content, providing a silver lining amid the sector's broader challenges.

The total tonnage received at Alang Port was 8,037 LDT this week.

Pakistan

This week, Pakistan's ship recycling market showed notable strength amid global market challenges. Despite a persistent tonnage drought and low steel plate prices - remaining at $706/t-Gadani recyclers outperformed their 2023 volumes, aided by stable domestic fundamentals. The Pakistani rupee firmed slightly to PKR 278.35 against the US dollar, adding to the market's stability. Gadani was the only subcontinent market to see a positive shift this week, benefiting from its relatively stable conditions as Indian and Bangladeshi markets continued to struggle. However, the lack of new arrivals and ongoing freight market activity limited immediate sales impacts. While the market remains cautious, Gadani recyclers resilience suggests growing potential as it leads in global ship recycling rankings this week.

As per market participants, a sale of South Korean built - Aquila was concluded at around $520/LDT comprising 8,000 LDT during the week.

The total tonnage received at Gadani Port was 3,585 LDT this week.

Bangladesh

This week, Bangladesh's ship recycling market was heavily impacted by the severe unrest and communication blackouts affecting the country. Violent protests and curfews, coupled with restrictions on internet and mobile services, severely hampered the ability to communicate with local recyclers and track pending deliveries. The Supreme Court's recent ruling to reverse the controversial quota ruling added to the uncertainty. Chattogram, a key recycling hub, faced additional challenges from torrential rains and storms during the monsoon season. Despite these difficulties, small-LDT, Far Eastern-built tonnage continued to arrive, though local market conditions weakened significantly, with prices falling to $500/LDT and below for smaller units. The Bangladeshi taka depreciated to BDT 117.90 against the US dollar, and steel plate trading stalled due to ongoing curfews. Overall, the market remains subdued and unstable amid the broader crisis.

The total tonnage received at Chattogram Port was 19,222 LDT this week.