South Asia: Ship recycling market sees mixed trends w-o-w
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The South Asian ship recycling industry saw mixed trends. In India, Alang recyclers remained resilient amidst upcoming elections, engaging in high-priced transactions. Pakistan's market was subdued due to the Eid holidays, but activity picked up later. Bangladesh experienced a slowdown during Eid observance, with a gradual return of buyers expected.
INDIA
Alang recyclers showed resilience amidst the distractions of upcoming elections, engaging in high-priced transactions for a marginally firmer selection of vessels available this week. This resilience was notable considering the fluctuations in local sentiments, particularly following last week's sharp drop in local steel plate prices and the unexpected decline of the Indian rupee against the US dollar. The underlying reason behind this unexpected firming may be the gradually strengthening belief that the Modi government will secure another term, leading to the execution of infrastructure projects to stimulate the economy in the near future. With the monsoon season approaching, there's a sense of urgency to secure units and capitalise on current prices before the steel rush begins.
The overall situation in Alang appeared conflicted, especially as the local anchorage remained empty while competing anchorages in Gadani and Chattogram reported numerous vessels. This isolation should have spurred Alang's interest in tonnage this week, particularly with older containers increasingly proposed for sale amid dropping freight rates. As the pre-monsoon period approaches, Alang's beaching lanes are expected to get busier, bringing hopes for increased activity in the near future.
Notably, there was no fresh tonnage received in Alang this week.
PAKISTAN
The Pakistani ship recycling market was subdued last week due to the observance of the Eid holidays. While there has been a gradual pickup in activity since then, significant developments are yet to be reported. Despite the shortage of recycling candidates impacting the sector, Pakistan's comparatively firmer pricing than India has resulted in a surprisingly busy Gadani Port report for 2024, approaching last year's volume with a commendable performance. With the increasing supply of units preferred by Indian buyers over domestic competition, local buyers are anticipated to engage in robust bidding to fill Gadani yards and maintain letters of credit (LC) limits. The competition between Pakistan and India in the ship recycling market remained uncertain as we approach May 2024.
Local fundamentals, such as steady steel plate prices were hovering around $740/t and a relatively strong Pakistani rupee at PKR 278.21 against the US dollar, provide Gadani buyers with greater stability compared to their counterparts in Chattogram.
The total tonnage received in Gadani port was around 19,204 LDT this week.
BANGLADESH
Market activities in Bangladesh slowed down during the week due to Eid observance and related holidays, resulting in most buyers being absent from the market. However, as the market gradually reopens, buyers are energised with fresh L/C approvals and have begun making bids, although sales have yet to be finalised.
Looking ahead to the new week, domestic ship recyclers are preparing to resume operations, clearing local yards as usual. There has been a noticeable increase in older vessels available for sale, coinciding with a drop in freight rates following a shortage in Q1. Despite stable local steel plate prices, the rise in vessel offerings from Chattogram buyers is exerting pressure on margins.
The consistent performance of the Bangladeshi taka against the US dollar continued to strengthen domestic purchasing power. With a growing supply of vessels, there is an anticipation of a buying spree from Bangladeshi ship recyclers before the monsoon season arrives.
The total tonnage received at Chattogram port was around 17,935 LTD this week.
