South Asia ship recycling market shows mixed trends; India stable, challenges weigh on Pak, B'desh

• Pak's Gadani fails to compete, receives no tonnage
  
  
• Low steel demand, falling exports hit Bangladesh
  
  

The South Asian ship recycling sector experienced mixed movements this past week. The Indian market remained stable despite recent minimal sales at Alang Port in the week under review, although challenges from cheap Chinese steel persisted.

Pakistan's ship recycling market faced significant struggles, with no tonnage received at Gadani. Declining prices amid ongoing political unrest exacerbated the situation. Bangladesh was also affected by a stagnant economy and steel prices.

India ship recycling leads with stable prospects

India leads the ship recycling market but has seen minimal sales of late, resulting in an "empty week". This downturn is largely due to a lack of available vessels and weaker market fundamentals.

The market has been pressured by competition from cheap Chinese steel, which has bolstered Bangladesh's recycling industry. However, India's stronger economic fundamentals, with forex reserves at over $700 billion, may provide some resilience. Local steel plate prices have flat-lined, and the Indian rupee hit a record low against the dollar, ending the week slightly above 84.

The total tonnage received at Alang Port this week was 33,626 light displacement tonnage (LDT).

Pak faces challenges amid economic turmoil

This week, the Pakistani ship recycling market faced significant challenges, with declining sentiments and prices amid the IMF's loan review and ongoing political unrest which undermined international confidence.

Gadani struggled against competition from Bangladesh and India, leading many vessels to head to India instead, limiting local recyclers' opportunities. This was compounded by a slight decline in the Pakistani rupee (PKR) and steel prices stagnating at $665/t.

Despite a slight increase in available vessels, most buyers bypassed Gadani for Alang due to uncertain pricing and low market confidence. The lack of fresh arrivals at Gadani for over a month highlights ongoing difficulties. With cheaper Chinese steel re-emerging, concerns grow that Pakistan's domestic mills may face additional challenges, indicating a quiet market in the short term.

Notably, no tonnage was received at Gadani Port in this past week.

Economic, political woes weigh on Bangladesh

Bangladesh's market has been sluggish in recent weeks, heavily impacted by economic and political instability. The World Bank has flagged concerns about law and order, the upcoming general elections, and a weak financial sector, leading to its FY'25 growth forecast downgraded to below 5%. Inflation is exceeding 9% and dwindling dollar reserves have only worsened the situation, creating minimal interest in ship recycling activities. Local steel prices have stagnated at $533/t, with demand plummeting as mills remain shuttered, leaving stockpiles of recycled steel untraded. The weakening Bangladeshi taka, now approaching BDT 120 to the dollar, has further dampened the market.

Despite some small LDT vessels being committed to local recyclers, Bangladesh's overall market activity has slowed to a crawl. Even the arrival of a 10,000-t LDT bulker failed t6o lift the market from its slump. With little demand, falling exports, and ongoing political unrest linked to ex-Prime Minister Hasina's fallout, the outlook for Q42024 remains grim.

The total tonnage received at the Chattogram Port this week was 34,278 LDT.