South Asian ship recycling markets face challenges amid economic, political turmoil
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This week, ship recycling markets across the Indian subcontinent experienced significant hurdles as they navigated a mix of economic challenges, political instability, and adverse weather conditions. In India, Alang's market was strained by a sluggish economy, monsoon disruptions, and political uncertainty, while Pakistan's Gadani recyclers struggled with liquidity issues and internet disruptions, leading to subdued activity. Meanwhile, Bangladesh faced its own turmoil, with political upheaval and severe flooding further crippling its ship recycling industry. Despite these difficulties, there was some movement in the markets though, overall, the week was marked by caution and reduced activity.
India
India's ship recycling market faced significant challenges this week, grappling with the combined effects of a sluggish summer and a severe monsoon. The situation was exacerbated by political uncertainty following the recent election, alongside a lack of immediate infrastructure investments from the new coalition government. As a result, Alang's offers remained stuck, with local steel plate prices seesawing and the Indian rupee weakening to INR 83.95 against the dollar.
Despite the tough conditions, Alang buyers showed a strong appetite for high-grade non-ferrous steel, evidenced by the conclusion of the stainless-steel tanker sale of Japan built 'MEDELIN EXPO' at a striking $650-700/LDT. However, overall activity was subdued, with only one new vessel arriving at Alang's port.
The total tonnage received at Alang port this week was 18,302 LDT.
Pakistan
Pakistan's ship recycling market faced another challenging week, remaining well behind its regional counterparts. Gadani's recyclers were notably hesitant, with most unwilling to match the competitive levels offered by India, pushing the market into a distant third place. Despite y-o-y inflation slowing to 15% in August and the Pakistani rupee holding relatively steady at PKR 278.9 against the dollar, liquidity issues and a throttled internet infrastructure hindered market activity. The government's recent crackdown on internet speeds, aimed at increasing surveillance, further disrupted business operations, resulting in significant productivity losses across sectors.
Local fundamentals remained steady, with steel plate prices closing the week at $703/t, the highest in the industry. Yet, the reluctance of recyclers to engage actively, coupled with a lack of meaningful tonnage, saw Gadani port recording nil entries this week.
Notably, no new tonnages were received at Gadani Port this week.
Bangladesh
Bangladesh's ship recycling market remained deeply troubled this week, reflecting the nation's broader economic and political turmoil. Following the ouster of Prime Minister Hasina and subsequent military rule, communication breakdowns and severe flooding further crippled the industry. As a result, local recyclers showed little interest in ship recycling, with offers generally on the lower side. The Bangladeshi Taka saw minor stabilisation, closing the week at BDT 119.80 against the dollar, but steel plate prices fell by $13/t to $542/t. Despite these challenges, the waterfront remained busy, with new arrivals providing some relief to the struggling market.
The total tonnage received at Chattogram Port this week was 27,614 LDT.
