South Asia: Ship breaking tonnage down by 15% m-o-m in Jun'24
...
In June 2024, the South Asian ship-breaking sector experienced a decrease in tonnage received. India, Pakistan, and Bangladesh collectively processed 174,390 LDT, marking a 15% decrease from 206,032 LDT recorded in May. Annually, the tonnage declined by 7% compared to 188,035 LDT in June of the previous year.
Bangladesh reported the highest tonnage at 114,594 LDT, a 15% increase from 99,504 LDT in May. India followed with 59,796 LDT, showing a significant 29% drop from 84,181 LDT in May. Pakistan reported no tonnage in June, following 22,347 LDT in the previous month.
In total, twenty four ships were recycled in June, amounting to 174,390 LDT. Most of these were container ships, totalling 59,745 LDT, a significant 240% increase from 17,549 LDT in May. Bulk carriers and general cargoes followed with 23,522 LDT and 9,268 LDT, representing m-o-m decreases of 26% and 75%, respectively.
Notably, the total number of ships recycled in June dropped significantly by 23% to 27, down from 35 ships in May.
India
In June, Indian ship recyclers processed 59,796 LDT, a notable decrease of 29% compared to 84,181 LDT in the previous month. On an annual basis, this figure represents a decline of 21% from 75,938 LDT recorded in June 2023. No new ships were recycled during the month compared to nineteen ships reported in May.
During the month, , India's ship recycling market faced mixed sentiments. The month began with optimism as rising steel plate prices and competitive offerings made Alang recyclers highly attractive, despite a slight dip in the rupee. However, political uncertainties post-election led to a drop in investor confidence and steel plate prices. The retention of the current government brought cautious optimism, with expectations of economic stimuli from the upcoming budget. Despite economic pressures, Alang's market showed resilience with notable transactions and robust activity, making it a focal point for global ship recycling.
Pakistan
In Pakistan, no tonnage was recycled in June, while in May the figure was 22,347 LDT. Approximately ten ships were recycled during June, a significant increase of 150% compared to just four in May.
Pakistan's ship recycling market faced significant challenges and a downturn. Early in the month, weak steel plate prices and a stagnant Pakistani rupee kept buyers sidelined. Despite easing letters of credit (LC) restrictions and stable steel prices in the mid-$700s/t, monsoon season and Eid celebrations halted activity. Fiscal measures aimed at securing IMF loans and a restrictive budget further strained the market, leading to no new arrivals in Gadani for several weeks. By the month's end, rising income taxes and an anticipated drop in tonnage supply compounded the negative outlook.
Bangladesh
In June, Bangladeshi recyclers processed approximately 114,594 LDT, a 15% increase from 99,504 LDT recycled in May. On an annual basis, the tonnage increased by 2% compared to 112,097 LDT reported in June 2023. About seventeen ships were recycled during the month, marking a 42% increase compared to twelve ships recycled in May.
Bangladesh's ship recycling market faced considerable challenges. Economic strain from currency depreciation, high interest rates, and a restrictive budget hindered market activity. Local steel plate prices fell, impacting operational margins. The FY 2024-2025 budget offered limited relief, and tightened financial policies further strained the sector. Despite receiving vessels, local buyers were forced to lower their offers, often below those in India. By month's end, fiscal policies and a weak taka exacerbated the situation, with most tonnage redirected to India.
