South Asia: Pakistan's ship recycling market remains dormant, Bangladesh faces economic challenges

• India's Alang remains leading player in South Asia
  
  
• Funding shortages, LC restrictions impact Pakistan
  
  

This week, South Asian ship recycling markets showed mixed trends. India's Alang remained strong, securing nearly 40,000 LDT despite lower price levels. However, Pakistan's market struggled, with no tonnage received at Gadani, due to funding shortages and economic instability. Meanwhile, Bangladesh saw a slight uptick in demand but faced challenges with falling steel prices and ongoing economic uncertainty.

India's Alang stays strong despite lower price levels

This week, India's ship-breaking market faced challenges due to lower price levels, but Alang remained the leading player in South Asia. India continued to secure vessels, particularly dry bulk units, at sub-$500/light displacement tonnage (LDT) levels despite an economic slowdown and a weakening rupee. Notably, the Indian rupee hit a historic low against the US dollar, and steel plate prices fell by $6/t w-o-w.

Alang's recyclers successfully acquired several container vessels, including a chemical tanker, focusing on recycling tonnage compliant with the Hong Kong Convention (HKC). This strengthened Alang's position, with nearly 40,000 LDT processed. With Pakistan's market fading and Bangladesh maintaining high prices, India continues to lead the regional ship-breaking industry.

The total tonnage received at Alang Port this week was 39,652 light displacement tonnage (LDT). In the previous week, 37,052 LDT were received.

Pakistan faces funding shortages

Pakistan's ship-breaking market struggled again this week, with little activity reported. Uncompetitive offers, a lack of funding, and restrictions on opening new letters of credit (LCs) left Gadani's yards largely empty.

Pakistan's economic crisis was worsened by the revelation that $440 million of International Monetary Fund (IMF) funds have possibly been misappropriated, which has hindered the nation's ability to secure a crucial $7 billion bailout. Coupled with a large tax shortfall, the resulting instability has restricted financing, further weakening the ship-breaking industry's ability to compete internationally.

With the Pakistani rupee weakening and steel prices falling, the outlook for Pakistan's ship-breaking market remains grim in the near term. In the coming year, it will be crucial for Pakistan to stabilise its economy and invest in the ship-recycling sector if it hopes to regain its competitive edge.

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

Bangladesh struggles amid economic instability

Bangladesh's ship-breaking market showed contrasting trends this week, with a slight increase in local demand driven by a few buyers who had access to both yard capacity and LC limits. However, overall activity remained limited, with only around 27,000 LDT of Far Eastern tonnage, including a small tanker, expected for delivery.

Despite the uptick in demand, steel plate prices fell by nearly $8/t, and the Bangladeshi taka remained volatile at historic lows. Economic instability, limited financing, and rising non-performing loans hindered a full market recovery. With the economy still struggling and key infrastructure projects stalled, the outlook for Bangladesh's ship-breaking sector remains uncertain.

The total tonnage received at the Chattogram Port this week edged down to 26,660 LDT compared to 27,420 LDT in the previous week.