Year-end sluggishness in South Asia's imported ship-breaking market

The South Asian ship-breaking market has experienced a lackluster end to the year, marked by disappointing performances in recycling markets. Owners and cash buyers have faced challenges in selling their inventories, particularly as prices have slumped in the region.

Bangladesh and Pakistan are grappling with LC/financing difficulties, resulting in minimal confirmed deals in these markets. Chattogram, a prominent ship-breaking location, may remain inactive until the elections in mid-January, with hopes that a change in regime will stimulate the local economy and international exports.

In a notable regulatory development, the UAE has issued a new law set to take effect in March 2024. The law limits any UAE-flagged or foreign-flagged vessels coming from the UAE to undergo the Hong Kong Convention's (HKC) only recycling in the South Asian subcontinent. The legislation includes some contradictory wordings regarding the prohibition of 'beaching,' necessitating further clarifications to fully understand the extent of the restrictions.

INDIA

The Indian ship-breaking market witnessed a continued decline this week, prompting desperate cash buyers to engage in several dry bulk deals below $500/LDT. Concerned about the possibility of further price drops.

Despite an improvement in steel prices over the week in India, the recent deterioration in prices has left end buyers unsettled, resulting in minimal impact on new offers. There is a hopeful outlook that sentiments may improve as the new year approaches. As per secondary sources, the current scenario suggests that India's market is best avoided, and a timely slowdown in supply might offer some relief to end buyers in the region.

The total tonnage received at Alang Port last week was 3,884 LDT.

BANGLADESH

With minimal interest from local buyers and being the least active subcontinent market, Bangladesh experienced another quiet week with little to report. The subdued market is expected to see increased activity post the mid-January elections, with hopes that a change in regime will stimulate economic growth.

The primary challenge for most buyers continues to be securing financing from banks, and as long as LCs remain restricted, it is anticipated that very few deals will be finalized for Bangladesh throughout the remainder of the year.

The total tonnage received at Chattogram port last week was 527 LDT.

PAKISTAN

Pakistan saw local buyers successfully securing a few deals, primarily involving Panamax-sized bulkers and a select few capable end buyers with LC approval. However, progress in Gadani has been notably slow, with LC approvals trickling in at a limited pace for buyers with bank approval.

Pakistan faces the pressing task of earnestly upgrading facilities in line with the Hong Kong Convention, especially with its impending accession into force in 2025. This commitment becomes even more crucial given the recent developments in the UAE. The proximity to the UAE underscores the significance of adhering to these standards, particularly in light of new laws affecting the recycling of ships, impacting both UAE-flagged and international tonnage.

The total tonnage received at Gadani Port last week was nil.