South Asian ship recycling markets see mixed fortunes; India gains while Bangladesh struggles

• Rising steel plate prices support Indian, Pakistani markets
  
  
• Even so, threat of fallout from Iran-Israel conflict looms large
  
  

The South Asian ship recycling sector experienced varied outcomes recently, as India, Pakistan, and Bangladesh contended with distinct economic and political challenges.

India's ship recycling market, centred in Alang, saw a surge in activity with rising steel plate and vessel prices, though it faced economic headwinds from currency fluctuations and oil price concerns tied to potential regional conflicts. Meanwhile, Pakistan's Gadani Port, after months of inactivity, showed signs of revival with increasing steel plate prices and renewed demand, yet concerns over regional instability tempered this optimism. In stark contrast, Bangladesh's market struggled as political unrest, economic difficulties, and a weakened currency dampened activity at Chattogram.

India's ship recycling market sees growth but faces rising economic headwinds

India's ship recycling market has seen a surge in activity recently, with steel plate prices firming up and vessel prices rising in Alang, spurred by a series of tonnage sales, including MSC containers, bulk carriers, and other private units. This influx has been a welcome change after months of lower activity. However, macroeconomic and geopolitical factors have cast a shadow over this progress.

The Indian rupee's recent decline and rising oil prices, fuelled by concerns over the Iranian conflict, could hit the Indian market hard, given its dependence on Iranian oil. Additionally, while steel prices have climbed up nearly $20/light displacement tonne (LDT) recently, the threat of cheaper Chinese steel imports looms, with domestic prices hovering near $492/t.

Alang buyers remain cautiously optimistic, awaiting tankers and specialised vessels, but the perception in the market is that vessel prices may have peaked for now. With infrastructure projects lagging and economic uncertainty looming, India's market remains steady but under pressure, much like Pakistan's ship recycling sector, as it braces for potential disruptions.

The total tonnage received at the Alang Port this week was 47,417 LDT.

Pakistan's ship recycling market remains uncertain amid positive shifts

Pakistan's ship recycling market has seen a positive shift, with steel plate prices rising by $8/t due to strengthening Chinese prices. Recent small LDT deliveries nearing completion have boosted local demand and inquiries for tonnage from Gadani. However, this momentum arrived too late to secure recent bulker offerings finalised in India, leaving Pakistan without new purchases or arrivals at the Gadani Port.

Notably, Pakistan is the only major recycling destination where the currency gained 5 basis points, closing the week at PKR 278.30 against the US dollar. This improvement has led to firmer local offers, elevating Pakistan to second place in market rankings.

However, potential regional conflicts, particularly with Iran, may impact the economy and make local recyclers cautious. With over a month of inactivity at the bidding tables, shipowners and cash buyers are hesitant to commit vessels, especially due to past performance issues and limited tonnage availability. Gadani's future appears uncertain as India strengthens its ship-breaking market.

Notably, no tonnage was received at the Gadani Port this week.

Bangladesh's ship recycling market struggles amid economic, political turmoil

The Bangladeshi ship recycling market has hit a low point, struggling with plummeting demand, weak sentiments, and halted activities. Despite recent efforts by the interim government to implement reforms, deep-rooted issues, including over 15 years of alleged mismanagement, continue to challenge the sector.

Worker unrest has risen due to widespread business closures, stemming from recent riots and heavy rains, which has further stalled economic recovery. Flooded highways have disrupted transport, leaving steel products stranded in local yards and causing plate prices to stagnate. The lack of demand has meant fewer ships arriving at the country's recycling yards, with only small vessels from the Far East maintaining any presence.

Moreover, the Bangladeshi taka's recent plunge to BDT 119.55 against the US dollar, a historic low, has added to economic woes, as competing regional currencies show strength. With bullish freight markets deterring ship arrivals and inflation concerns persisting, Bangladesh's ship recycling market faces continued challenges. The nation is likely to see limited improvement in the near term as it contends with these economic, political, and social obstacles.

The total tonnage received at the Chattogram Port this week was 19,599 LDT.