South Asia: Ship recycling market continues to experience challenges but recovery expected

• Alang remains active but struggles to secure tonnage
  
  
• Bangladesh sees steady tags despite economic struggles
  
  

South Asia's ship recycling markets faced challenges this week. Alang was active but struggled with tonnage availability and fluctuating prices. Additionally, Gadani's market remained inactive, with no vessel arrivals, while Chattogram continued to operate despite Bangladesh's economic difficulties. However, a rebound is expected for all markets eventually.

India's Alang struggles to secure tonnage

Alang's ship recycling market remained active this week, though it struggled to secure tonnage from the Far East. Despite some positive news about the possible imposition of tariffs on Chinese steel, offers from Alang declined due to weak market conditions, leading to a drop in sentiment.

In recent times, the Indian ship recycling sector has been facing challenges due to low confidence among recyclers, compounded by a weakening Indian rupee against the US dollar and fluctuating steel prices. Alang is also under pressure from competing Pakistani recyclers, who are expected to re-enter the market soon, as their yards become compliant with the Hong Kong Convention (HKC) regulations.

Despite these difficulties, India's economy remains one of the strongest in the global ship recycling market. The upcoming Union Budget, which is expected to reduce import taxes, could boost Alang's yards. With Alang already meeting HKC standards, it is well-positioned to lead the global ship recycling market by Q3CY'25, barring any significant policy changes.

According to market participants, workable prices were at:

• Bulkers: $445-450/LDT
  
  
• Tankers: $455-460/LDT
  
  
• Containers: $485-500/LDT
  
  

This week, Alang Port received 48,085 LDT, down from 57,610 LDT the previous week.

Pakistan struggles with low offers, economic challenges

Gadani Port remained empty this week, continuing the subdued trend seen over the last couple of weeks.

Despite local steel plate prices being the highest in the industry, Pakistani offers have remained the lowest in the subcontinent for over four months. This has led to nil vessels being imported into Gadani, and weak economic conditions have caused a lack of interest from recyclers.

This week, local steel plate prices rose unexpectedly by nearly $7/tonne (t) to $644/t, and the Pakistani rupee (PKR) strengthened slightly against the US dollar. However, Pakistan's broader economic struggles, including heavy debt and the need for fresh loans, severely impacted the ship recycling sector. Despite some inquiries, confirmed deals were nil.

Meanwhile, upgrades will be taking place at Pakistani yards to make them compliant with the HKC regulations. Recyclers are expected to re-enter the market soon, subsequent to this.

Gadani Port saw no vessel arrivals this week. The port has remained empty for quite some time now.

Bangladesh sees steady prices despite economic struggles

Chattogram's ship recycling market was subdued this week, as Bangladesh's economy struggled. Despite this, steel plate prices in Chattogram were steady w-o-w at $529/LDT, while neighbouring countries such as Pakistan saw hikes. The Bangladeshi taka continued to weaken against the US dollar, putting pressure on both the government and recyclers.

Economic challenges also worsened this week, due to a mid-year VAT increase, leading to protests and revisions. The interim government has failed to push forward infrastructure projects due to limited domestic reserves, and the upcoming FY'26 budget may not provide the necessary funds for ship recyclers to meet new HKC regulations.

According to market participants, 4-5 bulk carriers, primarily Panamax vessels, were sold at around $460/LDT. Furthermore, market activity is expected to increase after June.

Over 48,545 LDT arrived at Chattogram Port this week. Last week saw arrivals of 6,418 LDT.