South Asia: Ship Recycling Market Faces Challenges but Recovery Anticipated
South Asia’s ship recycling markets faced another week of hurdles: fluctuating prices, economic instability, and limited tonnage availability. Despite these challenges, industry experts predict a recovery for all major regional markets, including India, Pakistan, and Bangladesh. Alang in India remains active but struggles with securing tonnage, Gadani in Pakistan grapples with inactivity, and Chattogram in Bangladesh continues operations amid economic difficulties. Here’s a detailed look at the current state of these markets.
Alang, India: Active but Pressured by Market Conditions
India’s Alang ship recycling market maintained activity this week, though it faced significant challenges in securing tonnage, particularly from the Far East. Despite some positive news, such as potential tariffs on Chinese steel imports, the overall sentiment in Alang declined due to weak market conditions and fluctuating steel prices. These factors, coupled with a weakening Indian rupee against the US dollar, have eroded confidence among recyclers.
One of the key issues is competition from Pakistani recyclers, who are expected to re-enter the market soon after upgrading their facilities to comply with the Hong Kong Convention (HKC) regulations. This added pressure has led to a dip in workable prices in Alang, which stood at:
- Bulkers: $445-450 per Light Displacement Tonnage (LDT)
- Tankers: $455-460 per LDT
- Containers: $485-500 per LDT
This week, Alang Port received 48,085 LDT, a notable drop from 57,610 LDT the previous week.
However, the broader economic outlook for India remains robust, offering hope for Alang’s recovery. The upcoming Union Budget is expected to introduce measures such as reduced import taxes, which could bolster the sector. With Alang already meeting HKC standards, it is well-positioned to lead the global ship recycling market by the third quarter of 2025, provided there are no major policy changes.
Gadani, Pakistan: Inactivity Amid Economic Struggles
Pakistan’s ship recycling hub in Gadani remained inactive this week, continuing a trend of no vessel arrivals for several weeks. Despite local steel plate prices being the highest in the subcontinent—rising by $7 per tonne to $644 per tonne—Pakistani offers have remained the lowest in South Asia for over four months. This disparity has discouraged vessel imports and further dampened the market.
Economic challenges are at the core of Gadani’s struggles. Pakistan is grappling with heavy debt, a need for fresh international loans, and persistent currency fluctuations. Although the Pakistani rupee strengthened slightly against the US dollar this week, it wasn’t enough to spark renewed interest in the sector. Recyclers, burdened by these economic constraints, showed little enthusiasm despite some inquiries.
On a more optimistic note, Pakistani yards are undergoing upgrades to meet HKC regulations. Once compliant, these yards are expected to attract more business, potentially revitalizing the market. However, this week’s inactivity highlighted the immediate challenges, with Gadani Port recording no vessel arrivals.
Chattogram, Bangladesh: Steady Prices Amid Economic Challenges
Chattogram, Bangladesh’s primary ship recycling hub, continued operations this week despite significant economic headwinds. Steel plate prices remained steady at $529 per LDT, contrasting with hikes observed in Pakistan. However, the Bangladeshi taka’s continued depreciation against the US dollar has created financial pressures for both the government and ship recyclers.
The economic situation in Bangladesh worsened this week due to a mid-year Value Added Tax (VAT) increase, which sparked public protests and forced the government to make revisions. These challenges have stalled critical infrastructure projects, as limited domestic reserves have restricted funding. Additionally, the upcoming FY2026 budget is unlikely to allocate sufficient resources to help recyclers meet HKC compliance standards.
Despite these obstacles, Chattogram managed to sustain some activity. Market participants reported the sale of 4-5 bulk carriers, primarily Panamax vessels, at around $460 per LDT. This week, 48,545 LDT arrived at Chattogram Port, a significant increase from the 6,418 LDT recorded the previous week. Experts anticipate a further uptick in market activity after June, offering a glimmer of hope for recovery.
Outlook for South Asia’s Ship Recycling Markets
While South Asia’s ship recycling markets face immediate challenges, a recovery is anticipated in the medium to long term. India’s Alang remains a leader in the global market, supported by its HKC compliance and potential economic reforms. Pakistan’s Gadani could re-emerge as a competitive player once its yards meet international standards. Meanwhile, Bangladesh’s Chattogram continues to operate under economic strain but shows resilience through steady prices and consistent activity.
As the global economy stabilizes and demand for recycled steel rises, South Asia’s ship recycling hubs are expected to regain momentum. Industry stakeholders will be closely watching policy developments, currency fluctuations, and international steel prices in the coming months to gauge the pace of recovery. For now, the region’s markets are navigating turbulent waters but remain hopeful for smoother sailing ahead.
