South Asia: Ship recycling markets slow down amid currency issues, low demand

• India weakens due to currency volatility, low supply
  
  
• Pakistan struggles with dollar shortage, low steel tags
  
  

The South Asian ship recycling markets showed a downtrend w-o-w amid currency issues and tepid demand. India's Alang market weakened, impacted by low supply and currency volatility, though demand for specialised vessels kept prices high. Pakistan's market struggled with US dollar shortages and falling steel prices, while Bangladesh faced weak demand and low steel plate tags. However, all three markets are preparing for Hong Kong Convention (HKC) compliance in 2025.

India's Alang slows down amid currency volatility

India's ship-breaking market saw a slowdown over the week due to low supply and reduced activity, with many Alang yards partially shutting down. However, there was strong demand for the right vessels, which drove prices higher to $400/LDT, especially for specialised units, despite lower local steel tags.

While the Indian rupee declined by 17 basis points w-o-w, it briefly spiked to 85.31 in the middle of the week. This volatility led to uncertainty in the market.

As the year ends and the festive season begins, fewer deals are expected. However, Alang remains the busiest port, and with HKC certifications in hand, Indian recyclers are well-prepared for 2025.

The total tonnage received at Alang Port this week was 27,853 LDT. In the previous week, the port recorded trades of 45,853 LDT.

Pakistan hit by falling steel prices, HKC compliance risks

Pakistan's ship recycling market has been facing severe challenges due to a shortage of US dollars, which has hindered negotiations for tonnage and prevented necessary infrastructure upgrades. This puts the industry at risk of not meeting the 2025 HKC guidelines.

The port has remained empty for over 2.5 months, with many yards becoming inactive. The uncertain IMF loan, along with questions about misappropriated funding, has further complicated the situation.

Steel plate prices dropped by $8/t w-o-w, adding pressure to a market that is already struggling with low demand. With a rise in the Indian market's levels, local recyclers are uncertain about filling empty plots. The hope is that upcoming financial aid will help the industry meet HKC standards, or it may risk becoming obsolete.

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

Bangladesh struggles with low demand, dollar shortage

Bangladesh's ship-breaking market faced challenges last week, due to weak demand from steel mills, reduced orders, and a shortage of US dollars.

Due to the lack of activity, steel plate prices were low at $521/t, and despite news of a $500 million budget support loan aimed at strengthening reserves, recyclers remained cautious about making sales. This resulted in limited market activity in Chattogram.

Many yards have stayed empty throughout the year. The slowdown has led yards to focus on upgrading their infrastructure, with four facilities already approved by ClassNK in 2024. Although the volume of ships available for recycling is at a decade-low, recyclers remain hopeful for a recovery, especially with the HKC set to take effect mid-year.

The total tonnage received at the Chattogram Port this week stood at 32,607 LDT compared to 43,936 LDT in the previous week.

Outlook

As per BigMint's recent poll on the ship-breaking market's potential in 2025, the Indian market is widely expected to dominate, with 80-90% of participants forecasting the strongest growth in the region.

This growth is attributed to India's established infrastructure and increasing demand. Bangladesh is also seen as a strong contender, driven by the addition of HKC-certified yards and a competitive labour force, which is expected to support higher tonnage and growing domestic demand.

In contrast, Pakistan is projected to experience a decline in market activity, with expectations of the prevailing downtrend continuing into 2025.