South Asia: Ship recycling market witnesses slow activities w-o-w
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The South Asian ship recycling market experienced a sluggish week, with Indian buyers encountering limited demand amid fluctuating local steel plate prices. In Pakistan, uncertainty prevailed in market activities following the recent national election. Similarly, the Bangladeshi market remained slow post-elections due to higher freight rates and lower recycling prices, compounded by the ongoing Chinese New Year holidays. It is worth noting that the majority of the tonnage in Bangladesh is sourced from China.
INDIA
Following the recent sale of the last batch of Alang/HKC-only MSC containers, India is facing a challenging 2024 in the ship recycling market, with Alang currently struggling at the bottom of the sub-continent pricing board. In late 2023, due to difficulties in Bangladeshi and Pakistani markets securing financing, India emerged as the top-paying destination for ship recycling. However, in 2024, interest and demand from India have significantly diminished, prompting questions.
MSC's recent flurry of 'India only' sales for green HKC recycling has had minimal impact on Alang buyers' appetite, despite their watchful interest. Additionally, India's economy, while showing positive growth, has been unable to mitigate the constant volatility in local steel plate prices and the fluctuating Indian Rupee against the U.S. Dollar, leaving Alang recyclers uncertain about the market's future.
As a result, the Indian market has gradually become less competitive for non-HKC vessels, leading to a shortage of market tonnage in Alang. This shortage is evident with minimal beaching and no fresh arrivals reported recently.
Interestingly, the total LDT beached in Alang this week is less than the smallest vessel to beach in Chattogram, highlighting the challenges faced by the market
The total tonnage received In Alang was around 4,623 LTD this week.
PAKISTAN
Amidst political turmoil in Pakistan this week market activities remained limited. The election week witnessed violence, strikes, bomb blasts, and fatalities, resulting in a subdued week for recycling activity and offers from Gadani. Communication disruptions occurred as mobile and data services were frequently suspended to quell violence. With election results declared, fresh sales into the market are unlikely in the short term, exacerbated by limited ships available for sale and ongoing political unrest. On the local front, Pakistani steel plate prices remained stagnant, likely due to the absence of materials for resale by Gadani Recyclers. The Pakistani Rupee showed signs of strength, closing at PKR 279.2 against the U.S. Dollar, potentially heading towards PKR 278. Amid another tumultuous political episode, hopes are pinned on a period of calm following the conclusion of elections.
As per market sources, around 4,000 LTD container was sold at around $436/t levels on a CFR Gadani, however, the origin of the container could not be verified at the time of publishing this report. As per market participants, the current market is better, people are interested in buying but local market is not supporting as demand is consistently low and there are bleak chances of improvement.
The total tonnage received In Gadani Port was around 11,618 LTD this week.
BANGLADESH
Despite optimism in the ship recycling industry for a positive start to 2024, Bangladesh remains at the forefront of the sub-continent market rankings, yet domestic ship recyclers face a dry period in negotiating fixtures due to a severely restricted supply of vessels worldwide over several quarters. The majority of recycling tonnage in Bangladesh is sourced from Chinese owners, further exacerbating the shortage, especially with the onset of the week-long Chinese New Year holidays. This shortage has persisted throughout 2024 and preceding quarters, contributing to the gradual deterioration of the global ship recycling industry. Additionally, domestic fundamentals provide little relief as local steel plate prices have stabilized, indicating a depletion of stock from local yards and awaiting material from recent deliveries. The stability of the Taka at BDT 109.75 levels offers some security in local pricing. Despite the previous plummeting of vessel prices in Bangladeshi and Pakistani markets due to financing issues, the easing of these issues post-elections has not led to satisfying local demand. Ship owners struggle with persistently high freight rates and lower recycling prices, leading to expectations of a dry period in Chattogram in the near future. Bangladesh remains a market to watch, with domestic demand gradually increasing.
The total tonnage received In Chattogram port was around 46,844 LTD this week.
