South Asian ship recycling markets see mixed trends; India thrives amid increasing steel prices

• Pakistan's ship-breaking sector remains inactive amid pressure from Chinese import.
  
  
• Bangladesh sees only two vessel arrivals this week amid political weak market
  
  

South Asian ship recycling markets witnessed mixed trends this week, with the Indian cluster faring better than its Pakistani and Bangladeshi counterparts. While improving steel prices in India cheered local buyers, Pakistan remained dormant on the back of pressure from cheap Chinese steel imports. Additionally, Bangladesh struggled under the weight of the ongoing political upheaval, severe flooding, and poor domestic fundamentals.

Steel price surge propels Alang to top of global ship recycling market

India's ship recycling market saw an intriguing week. Despite the slight decline in the Indian rupee, which reached INR 83.70 against the US dollar, local steel prices surged unexpectedly by over $10/t. This led to a sharp rise in vessel offers from Alang, which pushed India to the top of global rankings for ship recycling. Prices at Alang jumped by about $20/light displacement tonne (LDT), reflecting increased demand from local recyclers, which was likely sparked by renewed hope for a market revival later in 2024.

Additionally, two bulkers were sold: the 1992 Japan-built "MERAY", comprising 3,918 LDT, at a solid $490/LDT, and the 1995 Japan-built bulker "ANDULUS", consisting of 6,064 LDT, at $470/LDT.

Local buyers' enthusiasm signals a potentially positive shift, though future trends remain uncertain amid global tensions and economic policies.

The total tonnage received at the Alang Port this week was 42,325 LDT.

Pakistan's ship recycling market stagnates amid struggling steel prices, import pressure

Pakistan's ship recycling market remained largely inactive this week, as Gadani buyers showed little interest in securing new tonnage. Despite the availability of bulkers with substantial bunkers onboard, Pakistan's recyclers made minimal offers.

A key factor behind this inactivity was the flood of cheaper Chinese steel imports, which forced mills to reduce local steel prices significantly, by over $11/t w-o-w. Unlike India, Pakistan has not imposed tariffs on these shipments, and the import pressure on its steel sector continues unabated. Additionally, challenges with USD liquidity, financing, and letters of credit (LCs) persist, despite a slight improvement in the Pakistani rupee, which strengthened by 32 basis points to PKR 277.50 against the US dollar.

With competing markets such as India and Bangladesh securing deals, Pakistan's ship recycling industry faces a grim outlook, with little hope of a revival in the near term.

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

Chattogram yards strain to keep up as Bangladesh's ship recycling market faces decline

Bangladesh's ship recycling market struggled to keep pace with India this week, as Chattogram yards faced dwindling vessel arrivals and a weakened market position. The country slipped to the second spot in the global rankings, with only two ships arriving at its ports this week. Redirected vessels from the Far East favoured Indian yards in the wake of Bangladesh's ongoing challenges.

Key factors contributing to this stagnation include political turmoil, severe flooding, and deteriorating domestic fundamentals. Steel plate prices hit a low of $538/t, and the Bangladeshi taka weakened to a record BDT 119.60 against the US dollar. Local shipyards also grappled with the consequences of fatal mishaps, adding to the nation's difficulties.

Despite these challenges, some optimism emerged among local recyclers, with hopes of economic improvements in Q4, fuelled by remittances from non-resident Bangladeshis. The Ministry of Environment's enforcement of ship recycling regulations has also opened up opportunities for yards to become compliant with environmental regulations. However, Chattogram recyclers must adopt a competitive strategy to stay ahead.

The total tonnage received at the Chattogram Port this week was 8,802 LDT.