The Alang coast, a significant hub for shipbreaking activities, witnessed a notable surge in ship arrivals during September, marking a promising turn of events for the local industry. In the current financial year, September emerged as a beacon of hope as 14 ships made their way to Alang, the highest monthly count thus far.
Between April and August, the number of ships arriving at Alang struggled to reach double digits. However, shipbreakers sensed an opportunity amidst an improved local scrap market. Eager to capitalize on the potential for further price corrections, shipbreakers enthusiastically purchased ships, leading to the arrival of 14 vessels in September alone.
Despite this positive momentum, challenges loom large over the industry. The increase in ship purchases prompted cash buyers and gardeners to raise ship prices by up to $25. In contrast, the local scrap market experienced a downturn over the past week, leaving shipbreakers in a precarious situation. Unable to afford the inflated prices, shipbreakers have adopted a cautious “wait-and-watch” approach before making new acquisitions.
According to Nayeembhai Masani, a prominent shipbreaker, while shipbreakers might be willing to take calculated risks of $5 to $7, a significant gap of up to $25 between ship prices and the scrap market poses a substantial financial risk for the final buyers. Consequently, many are opting to delay their investments until market conditions stabilize.
A Monthly Snapshot of Ship Arrivals in Alang:
- April 2023: 8 ships
- May 2023: 8 ships
- June 2023: 9 ships
- July 2023: 8 ships
- August 2023: 7 ships
- September 2023: 14 ships
The Local Market’s Rollercoaster Ride: The domestic scrap market experienced a brief period of improvement, enticing industrialists to invest in ships with hopes of sustained positive market movements. This optimism led to a slight upswing in ship arrivals during September. However, the industry remains shrouded in uncertainty. The soaring ship prices have currently placed them out of reach for most industrialists.
Rameshbhai Mendapara, Vice President of the Ship Recycling Industries Association (India), aptly summarizes the situation, highlighting the delicate balance between hope and caution that characterizes the Alang shipbreaking industry’s current landscape.