South Asia: Ship recycling market remains stable w-o-w except Bangladesh

The South Asian ship recycling market maintained overall stability in its activities, featuring consistent offers in India and Pakistan. However, there was a notable increase of $20/tonne (t) w-o-w in Bangladesh. The sub-continent ship recycling market experienced a week of steady progress, marked by minimal movement in local steel plate prices and relatively stable currencies. The week was characterized by a general quietness in the recycling market across the Indian sub-continent.

Pakistani buyers witnessed some relief in opening Letters of Credit (LCs), but challenges persisted in diverting vessels, given the favourable conditions in both Bangladesh and India.

In Bangladesh, the recent commitment of $1.364 million from the Norwegian Government, following the ratification of the Hong Kong Convention last year, contributed to the positive momentum. This financial support, combined with previous investments from the government of Japan and the Japanese Shipowner's Association (JSA) last year, represents promising developments for a market actively working towards enhanced and sustainable standards for end-of-life needs in the global fleet.

INDIA

Throughout the week, India's ship recycling market demonstrated resilience, maintaining stability even with a mid-week holiday observed for Republic Day. Notably, Alang buyers continued to present the lowest recycling rates among all sub-continent ship recycling destinations, adopting a strategy perceived as unsustainable due to operating at loss-making levels.

The scarcity of vessel supply prompted local buyers to offer higher rates, ensuring the sustained operation of their yards and the utilization of financing and credit lines. This necessity was further accentuated by positive movements in international steel prices and heightened competition from the markets in Pakistan and Bangladesh, creating additional pressure during the week.

Despite these challenges, the Alang market exhibited crucial positive aspects. The financial stability and swift setup of letters of credit (LCs) by local buyers played a pivotal role. Additionally, the consistent occurrence of 'Alang only' Hong Kong Convention (HKC) sales emerged as another vital aspect, capturing attention and sustaining the engagement of domestic yards.

Market sources reported the booking of a vessel carrying 3,200 LTD from China at $475/t CFR.

Furthermore, local plate prices remained stable w-o-w, and the Indian Rupee (INR) maintained overall stability at 83 levels against the USD.

The total tonnage received at Alang Port for the week amounted to 37,445 LDT.

BANGLADESH

In Bangladesh, buyers experienced improved offers during the week as they secured approvals for Letters of Credit (LCs) from their respective banks. This positive development was further strengthened by the recent commitment from the Government of Norway, pledging $1.364 million in collaboration with the International Maritime Organisation (IMO). The funds are earmarked for the joint implementation of the 'Safe and Environmentally Sound Ship Recycling Project' (SENSREC) Phase III, supporting Bangladeshi ship recycling yards in upgrading their facilities to meet the Hong Kong Convention (HKC) requirements. Consequently, there is a noticeable and justified progression in a positive direction for Bangladeshi recyclers.

In a broader context, buyers remain optimistic, striving to secure their share of tonnage from the diminishing supply of vessels. Their goal is to fill the remaining dormant plots locally and breathe new life into the domestic ship recycling industry.

The total tonnage received at Chattogram Port last week amounted to 23,722 LDT.

PAKISTAN

Throughout the week, Pakistani recyclers experienced a relaxation of restrictions by LC issuing banks, enabling them to establish viable financial instruments. Consequently, an increasing number of Gadani Recyclers secured financing, contributing to the reintegration of the Pakistani market into international bidding tables. This, in turn, led to heightened demand and strengthened vessel prices from Gadani Recyclers in the past few weeks.

However, the ship recycling sector faced challenges in diverting vessels, not only from an improving Bangladeshi market but also due to limitations imposed by the exclusive sale of 'Alang only' Hong Kong Convention (HKC) recycling units. These constraints further hindered Gadani Buyers from successfully concluding their share of units.

Moreover, market activities are expected to remain limited in the upcoming week due to the national elections scheduled on 8 February.

The total tonnage received at Gadani Port last week was 20,655 LDT.