South Asia: Ship recycling market continues to remain slow w-o-w

The South Asian ship recycling market experienced a slow pace this week, marked by distinct trends in India, Bangladesh, and Pakistan. In India, the market remained subdued due to a scarcity of ships available for recycling, driving ship prices to soaring levels despite high market prices. However, with Bangladesh facing its own challenges including a slowdown in bidding and financial uncertainties, and Pakistan mirroring similar trends, India appears poised to dominate market rankings in the upcoming quarter.

INDIA

India's ship recycling market remained quiet this week due to a scarcity of ships available for recycling. Despite high market prices, the limited supply has driven ship prices to very high levels, reducing overall activity. However, with Bangladesh set to decline in June and Pakistan's interest waning, India is poised to dominate market rankings for the next quarter.

The rise in local steel plate prices has been a significant boost to India's ship recycling sector. Vessel prices have continued to firm up, nearing Chattogram's pricing levels. Additionally, the anticipation of Prime Minister Modi's upcoming victory has sparked more than just market optimism; the Indian Rupee also surged notably towards the end of the week, approaching Rs. 82.99 against the U.S. Dollar, with further gains likely in the coming week.

The total tonnage received at Alang Port this week was around 19,680 LDT.

BANGLADESH

Bangladeshi recyclers have stepped back from bidding, slowing pricing momentum since the taka's crash. The ship recycling market is expected to face volatility in June due to several financial issues:

• The BDT has been intentionally devalued against the US dollar.
  
  
• Steel plate prices remain low.
  
  
• Likely restrictions on Letters of Credit (LC) due to dwindling US dollar reserves.
  
  
• High costs associated with transacting in U.S. dollars.
  
  

The IMF loan agreement and lack of financial foresight have exacerbated these issues, causing the taka to end the week at BDT 117.35 against the U.S. dollar. This has made L/Cs more expensive, adding BDT 7 for every USD 1, hurting Bangladesh's ship recycling sector. With the national budget for 2024-2025 approaching, there is hope for some relief.

The total tonnage received at Chattogram Port was around 49,360 LTD this week.

PAKISTAN

Pakistan's ship recycling market has resembled Bangladesh's more than India's lately. Cooling prices and demand had led to Gadani recyclers stepping back from bidding. However, three new arrivals that week, including two LDT bulk carriers, had helped Pakistan surpass its 2023 ship recycling volume.

Local steel plate prices in Pakistan had dropped by USD 25/tonne (t) in a day but stabilised afterward, indicating some demand for steel. The Pakistani rupee had firmed to PKR 278.10 against the US dollar, stabilising market deals.

The total tonnage received at Gadani Port was around 13,078 LTD this week.