South Asia: Ship-breaking tonnage sees two-fold growth in Aug'24
...
The South Asian ship-breaking sector experienced an almost two-fold surge in August 2024, with India, Pakistan, and Bangladesh collectively dismantling 151,594 light displacement tonnes (LDT) - a staggering 91% jump from July's 79,486 LDT. Despite this sharp m-o-m growth, the annualised tonnage saw a significant 88% drop compared to the 245,569 LDT processed in the same period last year.
India
India led the ship-breaking sector in August with 74,771 LDT, a massive 102% increase from July's 37,082 LDT. However, this figure marked a slight decline of 1% from the 75,317 LDT recorded in August 2023.
The Alang ship-breaking yard saw a 33% m-o-m rise in ship arrivals, with twelve ships received for recycling in August, three more than in July.
Despite the growth in tonnage, India's ship recycling market faced uncertainty in August 2024. Infrastructure projects announced in the recent budget are not expected to impact the sector immediately, and a surge in cheaper Chinese steel imports continued to strain the availability of ship recycling scrap. Additionally, the weakening Indian rupee, which hit a record low against the US dollar, reduced local purchasing power.
As a result, Alang's recyclers remained cautious, operating with reduced activity and relying on a limited supply of older vessels.
Pakistan
Pakistan recorded 15,435 LDT of ship-breaking tonnage in August 2024, reflecting a 12% rise from July's 13,776 LDT. On a y-o-y basis, this was a substantial 58% increase from the 9,743 LDT recorded in August 2023.
Despite this growth, only two ships were recycled in August, the same number as in July.
Gadani Port faced a severe shortage of tonnage, with just two new arrivals over nearly four weeks. While the overall ship recycling market remained firm and local steel plate prices rose, recyclers struggled with limited vessel availability. This shortage prevented them from fully capitalising on their competitive pricing, despite the relatively stable Pakistani rupee. Logistical challenges and a lack of suitable vessels contributed to an inactive month in terms of new tonnage.
Bangladesh
In August 2024, Bangladeshi recyclers processed around 61,388 LDT, an impressive 112% increase from the 28,628 LDT recycled in July. However, on a y-o-y basis, this represented a 62% decline compared to the 160,509 LDT recorded in August 2023.
Nine ships were recycled during the month, four more than in July, marking an 80% rise m-o-m.
Despite the increase in tonnage, Bangladeshi ship recyclers faced significant challenges in August due to political instability. Local buyers expressed concerns about the country's economic outlook as the Bangladeshi taka fluctuated and steel plate prices saw a slight decline. Widespread flooding and issues linked to the newly formed government further disrupted the industry, with many factories operating at only 50-60% capacity. Additionally, stricter banking regulations on letters of credit (LCs) constrained market activity, adding to the sector's difficulties.
