South Asian ship recycling markets struggle amid series of challenges

This week, South Asia's ship recycling markets encountered a series of challenges that tested the industry's resilience. In India, Alang faced weak prices and intense competition, particularly from Pakistan, as local recyclers dealt with the effects of an unfavourable fiscal budget and a surge in cheaper Chinese steel. Meanwhile, recyclers in Gadani, Pakistan, adopted a cautious approach, strategically underbidding despite strong fundamentals. In Bangladesh, the Chattogram market continued to suffer from political instability, resulting in disorganised operations.

India

India's ship recycling market struggled to find stability this week amid ongoing challenges. The sector is still grappling with the effects of a disappointing fiscal year budget, coupled with erratic domestic conditions and a surge in cheaper Chinese steel imports. With ship steel remaining scarce, local buyers in Alang faced intense competition, particularly from Pakistan, making it difficult to secure available units. Prices in Alang were weak, with most recyclers opting to observe market developments rather than actively bid.

A slight recovery in Indian steel plate prices and a marginal strengthening of the rupee against the US dollar offered a glimmer of hope. However, overall market sentiment remained cautious, with Alang's recyclers depending on a limited influx of smaller vessels, such as trawlers and reefers, to sustain operations.

The total tonnage received at Alang port this week was 15,087 LDT.

Pakistan

Pakistan's ship recycling market maintained a cautious approach this week, despite its potential to lead in pricing. Gadani recyclers, supported by strong fundamentals such as stable steel plate prices at $735/t and a steady Pakistani rupee, chose to underbid competitors, positioning themselves just below the market leaders. This strategy has kept them at the lower end of market rankings, even though they have the financial capacity to offer higher bids.

The inflow of cheaper Chinese steel has started to impact the market, reflecting the challenges faced by Indian recyclers. Despite these issues, Gadani secured a large bulk carrier and a smaller vessel this week, showing that the market remains active but not aggressively competitive. With ongoing geopolitical tensions and a prolonged scarcity of vessels, Gadani appears to be content with its current pace, though this relaxed approach could become problematic if market conditions shift significantly.

The total tonnage received at Gadani port this week was 15,435 LDT.

Bangladesh

This week, Bangladesh's ship recycling market continued to struggle in the wake of severe political unrest. The Chattogram ship recycling market, a key industry hub, remained in disarray. Financial constraints, unstable political conditions, and ongoing communication breakdowns have deterred many cash buyers and ship owners from considering Chattogram. Only a few local buyers with available letters of credit (LCs) limits have managed to keep the market barely operational. Despite this, the overall environment remained bleak, with stagnant local steel plate prices and recyclers prioritising personal safety over business operations. The arrival of a LDT tanker provided a brief highlight, but it did little to alleviate the pervasive uncertainty and fear affecting the market.

The total tonnage received at Chattogram port this week was 27,215 LDT.