South Asian ship recycling markets struggle; Indian container prices plummet below $500/t

The South Asian ship recycling market experienced another challenging week, with subdued activity across India, Pakistan, and Bangladesh. Prices in India's Alang dropped unexpectedly below $500/tonne (t), triggering market shock, while Pakistan's Gadani yard remained largely inactive, failing to capitalise on market opportunities. Bangladesh, similarly, faced stagnation with no new arrivals or sales as economic and political instability continued to weigh heavily on the sector. Despite minor movements in steel prices and currency fluctuations across these regions, the outlook for a near-term recovery remains bleak, leaving all three major South Asian ship recycling hubs grappling with uncertainty.

Indian prices plunge to their lowest in 2024

India's ship recycling market took an unexpected turn this week, with prices for containers from Alang dipping below $500/t, the lowest seen in 2024.

MSC made waves by clearing out older vessels, including MSC GABRIELLA, comprising 8,911 light displacement tonnes (LDT), at $499/t and MSC AGATA II, consisting of 7,364 LDT, at $505/t. These unexpectedly low prices, despite including bunkers, shocked the market, causing several sellers to withhold tonnage.

Interestingly, local steel plate prices jumped by $8/t, driven by recent tariffs on cheap Chinese imports, and the Indian rupee strengthened to INR 83.50 against the US dollar. However, these factors have done little to uplift the ship recycling sector. With six vessels awaiting delivery in Alang, the market remains strained. A Q3/Q4 recovery appears increasingly unlikely, although Bangladesh's delayed resurgence could boost Alang's standing in the global market.

The total tonnage received at the Alang Port this week was 36,265 LDT.

Pakistani market remains detached despite strong fundamentals

Pakistan's ship recycling market remained remarkably quiet this week, even with India's below-$500/t offers or Bangladesh's off-form market. The lack of engagement at bidding tables highlights how disinterested Gadani buyers have become. There were virtually no offers or inquiries, and the market's silence stretched on, reflecting a broader trend of inactivity in recent weeks.

This disinterest is perplexing, especially as Pakistan's rupee remained stable at PKR 278.35 against the US dollar, and local steel plate prices edged up by $2/t. These factors should have provided some momentum for Gadani recyclers to secure non-Hong Kong Convention (non-HKC) arrivals, yet they stayed on the sidelines. The sector's lack of participation continues to raise concerns, particularly as Pakistan could have redirected tonnage from neighbouring markets such as India, which saw at least two vessels delivered this week.

Bangladesh faces listless market amid weak offers

Bangladesh's ship recycling market remained stagnant this week, with no new sales or arrivals in Chattogram and only last week's deliveries being processed. The market continues to suffer from weak offers, which do not reflect prevailing fundamentals. Bangladesh is grappling with a devalued taka, now nearing BDT 120 against the US dollar, following riots, regime changes, and economic instability. Local steel plate prices remained low at $538/t, further demotivating recyclers.

Despite the easing rains, recycled steel output failed to pick up. An ongoing investigation into an explosion at a local yard that killed six people could lead to stricter regulations, potentially affecting pricing and clearance times. With freight markets remaining strong, many vessel owners are choosing trading options over recycling, leaving Bangladesh's ship recycling sector mired in uncertainty and inertia.

The total tonnage received at the Chattogram Port this week was 10,310 LDT.