South Asian ship recycling market witnesses mixed trends amid economic headwinds
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This week, the South Asian ship recycling market faced significant challenges in India, Pakistan, and Bangladesh. In India, the unexpected General Election results caused uncertainty which resulted in Alang ship recyclers to hold back bidding until the upcoming Budget. Pakistan struggled with new customs duties and higher import taxes, further depressing vessel prices and interest in Gadani. Bangladesh, despite receiving IMF funds, continued to face economic pressure resulting in lower vessel prices and weakened steel market sentiments.
India
India's ship recycling market was shaken by the unexpected outcome of the General Election which created unease about the country's economic future and infrastructure projects. Alang ship recyclers have largely refrained from bidding and are likely to maintain this stance till the General Budget later this month.
Local steel plate prices decreased by $3/t, and the Indian Rupee remained weak but firmed up slightly at INR 83.46 against the USD. The subdued market sentiment was evident, with only one vessel arriving and being delivered promptly within a day. Despite these challenges, business conditions in India remain relatively stable, although the influx of cheap steel imports has negatively impacted the price of re-rolled material that dropped by about $25/LDT.
Total tonnage received at Alang Port was 24,328 LDT this week.
Pakistan
Pakistan's ship recycling market faced significant setbacks due to an unfavourable post-budget scenario. Additional customs duties of 2% on incoming ships for FY'25 are expected to depress vessel prices by around $10/LDT, with potential for further increases as new recycling units arrive. The import duty on re-rollable/melting scrap also rose from 1.25% to 1.85%, impacting the steel industry.
The absence of Gadani buyers at bidding tables is not surprising given these conditions and the ongoing disruptions in the Middle East. Local steel plate prices remain stagnant at PKR 705/t, while the currency firmed slightly below PKR 278 against the USD. With no new tonnage and low interest, Gadani's waterfront is likely to report an empty anchorage in the coming week, reflecting the broader monsoon-induced slowdown in the market.
Total tonnage received at Gadani Port was 17,147 LDT this week.
Bangladesh
This week, Bangladesh's ship recycling market faced continued challenges despite the IMF's third tranche of loan providing short-term economic relief. The easing of LC restrictions has improved sentiments for the time being but underlying economic issues persist. Efforts to bolster exports and reduce import-related expenditures are ongoing, as foreign exchange reserves remain under pressure due to heavy loan repayments.
Vessel prices and sentiments for smaller Far Eastern-built ships are deteriorating due to high steel wastage. Larger, well-maintained vessels from Japan and Korea are scarce, with 75% of available ships from the Far East being small LDT units. Despite hopes pinned on the IMF funds, the BDT remained weak and local steel plate prices fell by nearly $10/t. Recyclers are content with low-ball offers, seizing any deal that comes their way.
Total tonnage received at Chattogram Port was 14,941 LDT this week.
