Leading cash buyer of ships for demolition, GMS predicted that, in recent times, the Indian ship recycling sector has experienced a series of positive developments, while its counterparts in Pakistan and Bangladesh are struggling to catch up. Despite minor fluctuations such as a decrease in steel plate prices by approximately USD 11 per ton and a slight weakening of the Indian Rupee, the overall outlook for India remains optimistic. These trends were discussed at length during the annual Tradewinds Ship Recycling Conference held in Singapore, where key stakeholders, including ship recyclers, owners, regulatory bodies, end buyers, cash buyers, monitoring companies, underwriters, and brokers, convened to assess market sentiments, fundamentals, and the latest regulations shaping the industry’s future.
One of the significant topics of discussion at the conference revolved around the potentially ambiguous and contradictory nature of European Union (EU) vs. Hong Kong Convention (HKC) Recycling regulations. There was a healthy debate surrounding the rules and requirements imposed on each vessel, highlighting the need for industry players to navigate this complex regulatory landscape.
A noteworthy milestone was the ratification of the HKC in Bangladesh, paving the way for its entry into force in two years. After this period, all ship recycling yards in Chittagong must be HKC approved to continue operations. This development signifies a crucial step forward for Bangladesh’s ship recycling industry.
However, the scenario in Pakistan and Bangladesh remains stagnant, with steel plate prices plateauing and local currencies following a similar trajectory as the previous week. Turkey, too, faced challenges, with weaker steel plates and a lack of fixtures to support local demand.
Looking ahead, the industry anticipates a steady flow of feeder containers and dry bulk vessels as the year draws to a close. Recycling rates are expected to remain historically firm, hovering in the low to mid 500s per light displacement ton (LDT). While recycling tonnage volumes remain subdued, industry experts are optimistic about a potential surge in supply in 2024.
Furthermore, there is a collective hope within the industry that recycling markets, especially in Pakistan and Bangladesh, will operate at full capacity in the coming year. This optimism is bolstered by the expectation of increased security and efficiency in opening letters of credit (L/Cs), providing a boost to the ship recycling sector in the region.
In conclusion, the Indian ship recycling sector stands as a beacon of positivity amid a challenging global economic landscape. With careful navigation of regulatory complexities and a hopeful outlook for the future, the industry is gearing up for a potentially transformative period, emphasizing sustainable practices and economic growth in the ship recycling sector.