South Asia: Ship recycling markets face challenges; outlook bullish as HKC compliance deadline nears

• India's Alang yard witnesses low activity, steel prices drop
  
  
• Pakistan's Gadani port remains empty, market struggles
  
  

The ship recycling markets in South Asia continued to face significant challenges, with India, Pakistan, and Bangladesh all experiencing ongoing economic and market pressures. In India, Alang's market remained subdued, grappling with low steel plate prices and a depreciating Rupee, while Pakistan's Gadani Port saw no new tonnage due to economic instability and currency issues. Similarly, Bangladesh's ship recycling market struggled with minimal activity, as weak demand and a depreciating Taka added further strain.

India's ship recycling market volatile

India's ship recycling market remained subdued this week, with no new arrivals at Alang and continued struggles from economic and market pressures. Steel plate prices have plummeted to new lows, around $450/t, reflecting a significant drop of over $150/t this year. The declining Rupee, which hit INR 85.40 against the USD, further eroded profitability for local recyclers. Although tariffs on Chinese steel, ranging between 10-15%, are expected to bolster domestic competition, the potential redistribution of cheaper Chinese inventories could counteract benefits for recyclers.

Despite these challenges, Alang has seen increased interest recently, as global cash buyers begin accepting the reality of lower vessel prices. However, this week was marked by inactivity, with only prior arrivals being processed and no fresh deliveries, hinting at another potentially quiet week ahead. As the HKC convention approaches enforcement, Alang's HKC-compliant yards remain prepared to welcome an anticipated surge in tonnage in 2025, offering a glimmer of optimism in an otherwise turbulent year.

The total tonnage received at Alang Port this week was 10,123 LDT. In the previous week, the port recorded trades of 27,853 LDT.

Pakistan's ship recycling market struggles amid instability

Pakistan's ship recycling market endured another difficult week, marked by continued economic instability and limited activity. The Pakistani Rupee's depreciation, coupled with a severe shortage of US Dollars, has hindered trading and access to essential L/Cs, leaving local recyclers in a precarious position. The market continues to suffer from low tonnage supply, with Gadani's port largely empty for nearly three months, reflecting the broader struggles of the industry.

This week, local steel plate prices dropped again by $7/t to $639/t, exacerbating the lack of participation in ship recycling deals. Pakistan remains significantly behind Bangladesh and India in terms of market demand, pricing, and facility upgrades for compliance with the Hong Kong Convention (HKC). While its neighbors are making significant investments in yard improvements, Pakistan has yet to initiate any substantial upgrades, limiting its future prospects. With the economic situation showing no signs of improvement and HKC compliance looming, the outlook for Pakistan's ship recycling industry remains bleak heading into 2025.

No tonnage was received at Gadani Port this week, and the port has remained empty for a prolonged period.

Challenges mount for Bangladesh's ship-breaking sector

Bangladesh's ship recycling market reflected continued challenges this week as economic pressures, subdued demand, and depreciating currency weighed heavily on the sector. Local recyclers saw minimal activity, with only a small sub-2,000 LDT tanker arriving for recycling, underscoring weak market sentiment. Domestic steel mills remained largely inactive, causing ship steel plate prices to stay depressed at around $ 521/t. The Bangladeshi Taka's ongoing depreciation, trading near BDT 119.99 against the USD, further constrained recycler's ability to secure competitive deals.

Despite these struggles, optimism for a recovery in 2025 persists, supported by the government's proposed budget increase for FY 2025-26 and the potential influx of larger LDT dry vessels for recycling next year. However, the sector faces additional pressure as impending HKC compliance deadlines approach, with only four Chattogram yards currently certified. While the outlook hints at long-term stability, the immediate market remains mired in slow trading volumes and declining steel demand, leaving the industry in a precarious position this week.

The total tonnage received at the Chattogram Port this week stood at 1,969 LDT compared to 32,607 LDT in the previous week.