South Asia: Ship recycling market improves in Bangladesh and Pakistan

In South Asia imported ship-breaking market improvements in Bangladesh and Pakistan were overshadowed by a global shortage of available tonnage, creating uncertainty in pricing assessments.

Recyclers are securing L/C approvals, leading to varied offers in the same region. Steel plate prices stabilised amidst geopolitical tensions, including U.S. retaliatory strikes in Syria and Iraq. Frequent attacks on merchant vessels in the Red Sea kept freight rates high, limiting recycling prospects. With the quieter Chinese New Year approaching, Q1 2024 may see subdued activity in global ship recycling markets. Regulatory updates include HKC-certified Indian yards gaining EU approval and Norwegian funding for facility upgrades in Bangladesh.

INDIA

India retained its status as the most cost-effective sub-continent ship recycling destination. However, there were no reported deals in the Alang market this week. Investments made by Alang Recyclers to upgrade their facilities to meet HKC standards are proving advantageous, especially for local buyers interested in green/specialist units slated for sale in 2024. In contrast, Bangladesh and Pakistan continue to lag behind in HKC compliance and recycling rates, leading to reduced confidence among ship owners. Despite India's stable fundamentals and strong domestic economy, local recyclers persisted in offering suppressed prices, despite the Indian rupee gaining ground against the dollar and local steel plate prices witnessing a significant rise this week. Nonetheless, these developments bring optimism to Alang Buyers as the industry progresses into February.

The total tonnage received at Alang Port for the week amounted to 39,291 LDT.

BANGLADESH

The Bangladeshi market has observed minimal activities in early 2024, with Chattogram Choppers resorting to smaller tonnage. There's a significant gap in offers from local buyers, resulting in uncertainty among ship owners. Furthermore, confidence in domestic fundamentals remained low due to recent market declines and banking restrictions. Despite this, the stabilised exchange rate of BDT 109.50 against the USD suggests a potential new norm.

Additionally, local steel plate prices have modestly improved this week, indicating a firming trend of nearly $60/t over recent weeks.

According to market participants, a sale of Panamax Bulk originating from Turkiye, WADI S (10,247 LDT), at USD 530/t LDT was reported in the week, which indicates a positive development attributed to its good condition and also included 14 bunkers.

The total tonnage received at Chattogram Port last week amounted to 39,973 LDT.

PAKISTAN

In 2024, despite challenges, Pakistan's ship recycling industry has rebounded, with Gadani witnessing increased activity. The shortage of tonnage globally has impacted market sales, frustrating buyers who secured financing. Despite economic and political turmoil, Pakistan's recyclers are resilient, surpassing last year's volume and acquiring a significant container from Indian competitors. Ratifying the Hong Kong Convention further solidifies Pakistan's position, posing a long-term concern for Alang buyers.

According to a recycler, "There's some activity in the market for vessels, but many are banking on improvements after the elections and anticipating a substantial depreciation."

The total tonnage received at Gadani Port last week was 11,618 LDT.