South Asia: Ship-breaking tonnage falls 12% m-o-m amid macroeconomic headwinds

• India's ship recycling tonnage doubles y-o-y in Nov'24
  
  
• Pakistan's ship recycling market freezes amid economic struggles
  
  

The South Asian ship-breaking sector saw a decline in activity in November 2024, with India, Pakistan, and Bangladesh collectively dismantling 166,456 light displacement tonnes (LDT), a 12% drop from October's 189,537 LDT. Despite this m-o-m decrease, the annualised tonnage showed a significant 92% increase compared to the 86,686 LDT processed during the same period last year.

India: Led the ship-breaking sector in November with 95,514 LDT, despite 15% decrease from October 111,815 LDT. However, this figure marks a sharp increase, more than doubling the 46,054 LDT recorded in November 2023.

The Alang ship-breaking yard experienced an increase in ship arrivals, receiving fourteen ships for recycling in November, two more than in October.

India's ship recycling market showed positive movement in November, with Alang maintaining its position as the busiest hub in South Asia. Despite competition from Bangladesh and a weakened rupee, India continued to secure vessels at sub-$500/LDT prices, particularly dry bulk units and HKC-compliant ships. The market faced challenges from inflation, and fluctuating steel prices, but activity picked up towards the end of the month, driven by smaller feeder containers and bulkers.

Pakistan: No ship-breaking tonnage was recorded in November 2024, marking a decrease from October, when 22,746 LDT was received. On a y-o-y basis, this represents a noticeable decrease from the 16,180 LDT recorded in November 2023. Notably, no ships were recycled in November, compared to one ship in October.

Gadani Port experienced a significant tonnage shortage, and the market struggled throughout November. Economic instability, a weakening rupee, and fierce competition from India and Bangladesh had a major impact the activity. The shortage of US dollars, tight financing, and pressure from low steel prices further hindered performance.

Additionally, setbacks with the IMF bailout and restrictions on opening new letters of credit left recyclers hesitant to bid, resulting in a weak outlook for the remainder of 2024.

Bangladesh: In November 2024, Bangladeshi recyclers processed approximately 71,032 LDT, marking a notable 29% increase from the 54,976 LDT recycled in October. On a y-o-y basis, this represented nearly a threefold increase compared to the 24,449 LDT recorded in November 2023.

Ten ships were recycled during the month, two more than in October, indicating an improvement in m-o-m performance.

Despite an increase in tonnage, Bangladesh's ship recycling market remained normal activity in November. Weak sentiment, stagnant steel prices, and a volatile taka limited the market's potential. Economic instability, high inflation, and political challenges further added pressure, while shrinking US dollar reserves and limited financing restricted buyers.

Despite a slight uptick in demand, the shortage of available ships and uncertainty in the economy suggest continued challenges for Bangladesh's ship-breaking sector through 2025.