South Asian ship recycling markets continue to grapple with economic headwinds in New Year

• Alang market remains resilient amid challenges
  
  
• Pakistan market shows potential after World Bank loan
  
  

The ship recycling markets in South Asia continued to face challenges last week. Alang showed steady activity with a slight decline in plate prices, while Pakistan's market showed signs of life but remained inactive due to financial pressure. Chattogram struggled with limited arrivals and stagnant prices, signalling a slow start to 2025 amid economic difficulties.

Alang recyclers remain optimistic

During the week, Alang recyclers focused on finding bargains, as only a few vessels were available for sale during the festive period. Indian plate prices continued to decline, dropping $1/LDT to $460/LDT, while the Indian Rupee hit a record low against the US Dollar before closing slightly higher.

Despite these challenges, Alang recyclers remained optimistic about the upcoming economic reforms and the February 2025 budget. The ruling party's success in the November elections helped maintain steel plate prices above those in Bangladesh, narrowing the price gap.

The Alang market continues to outperform competitors with steady activity, including recent sales of HKC-only tonnage like the tanker RIALTO (9,711 LDT) of Cameroon origin priced at $475/LDT. Despite lower-than-expected levels, three vessels arrived at Alang's port this week. The ongoing safeguard investigation by the Commerce Ministry related to a surfeit of cheap Chinese imports is expected to boost optimism, supporting ongoing activity and potentially driving ship recycling prices in 2025.

The total tonnage received at Alang Port this week was 18,514 LDT. In the previous week, the port recorded trades of 10,123 LDT.

Signs of recovery in Pakistan

The Pakistani ship recycling market showed signs of life with larger units like VLCCs proposed for recycling in Gadani, but no deal has been finalised yet. Buyers have been comparatively active at the bidding tables.

The Pakistani Rupee continued to decline, which heavily impacted local steel plate prices, dropping to $659/LDT. This, combined with low US Dollar reserves, led to the Gadani market ending 2024 on a weak note.

A World Bank loan of $2 billion could ease financial pressures and support the much-needed upgrade of Gadani's facilities to meet HKC standards. If the upgrades are successful, they could revitalise the market. While Pakistani ship recyclers have a lot of work ahead, 2025 could turn out to be one of the best years for the ship recycling sector.

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

Bangladesh struggles amid limited activity

Last week, Chattogram's shipbreaking market showed little activity, continuing the subdued trend from the previous quarter. The start of 2025 has been slow, with no new arrivals reported at the port. The only confirmed sale was the Panama-origin bulker THREE STAR (7,626 LDT) at $470/LDT, which is expected to arrive soon, while a vessel from last week remained idle at anchorage, awaiting its turn.

Economic challenges significantly impacted the market, with the Taka witnessing a record depreciation against the US Dollar before settling, which limited recyclers' ability to offer competitive rates for vessels. Additionally, local steel plate prices stagnated further restricting recyclers' pricing flexibility. Inflation and weak domestic demand added to the pressure, keeping the market subdued.

Recyclers remain cautious, and the market is struggling to reach the desired $500/LDT level, leading to reduced buying interest among recyclers.

The total tonnage received at Chattogram Port this week stood at 1,969 LDT, largely stable compared to last week.