Ship Recycling: India is currently in a downturn: BEST OASIS

Ship Recycling: India is currently in a downturn: BEST OASIS

The world’s leading cash buyer for ships sending for recycling BEST OASIS in their weekly ship recycling market report opined that, in the ship recycling sector, different regions are grappling with their unique market conditions. India is currently in a downturn with reduced demand for ship steel scrap, but there’s optimism for a rebound post-Eid, in line with historical trends that often see a revival after major festivals. In Bangladesh, the market remains stagnant with a slight decrease in local steel prices, and recycling activities are expected to halt temporarily during the Eid celebrations, likely leading to continued slow market conditions until early July. Pakistan’s market is adjusting to fiscal policy changes that have removed tax exemptions and abolished an 18% sales tax on scrap sales, with industry stakeholders evaluating the potential long-term impacts. Similarly, Turkiye is experiencing a market slowdown as the upcoming holiday week is anticipated to dampen activity, reflecting the typical ups and downs associated with regional holidays and their effects on industrial operations. 

Priya Blue Industries Pvt. Ltd. is among the key stakeholders expected to participate in a critical meeting scheduled on June 20, 2024, at the Gujarat Maritime Board’s (GMB) Head Office. This meeting is part of preparations for a forthcoming visit by the European Ship Recycling Association (ESCA) and a delegation from the European Parliament’s Environment Committee. The visit, planned for January or February 2025, will assess whether Indian shipyards, including those upgraded by GMB to meet EU standards, align with international environmental regulations. 

The Indian ship recycling industry is projected to achieve a 15% revenue growth this fiscal year, as per CRISIL Ratings, rebounding after two years of decline. This growth is driven by an increased supply of ageing vessels due to global expansions in ship capacity, and India’s competitive advantage over Bangladesh and Pakistan. Lower freight rates will make older ships economically unviable, leading to more being decommissioned for recycling. Indian recyclers, favored for their efficiency, are expected to see a 20-23% increase in volume, with stable cash flows and healthy credit profiles supported by solid operational and financial foundations. 

INDIA

The market anticipates a post-Eid rebound in demand amid the current downturn. 

600 

500 

The market is currently experiencing a downturn, with notably low demand. 

400 

Cheaper steel scrap alternatives from other sources are available, leading to a decrease in interest in ship steel scrap. 

Positive momentum in demand is anticipated after Eid, based on historical trends of market revival following major festive periods. 

India is expected to maintain its position as the fastest-growing economy in the Asia Pacific region in 2024, propelled by strong domestic momentum. According to a leading ratings agency, India showcased significant growth in the first half of the year. This upward trajectory is anticipated to surpass pre-COVID growth figures, fueled by increased exports, robust local demand, and extensive government spending on infrastructure. 

Beaching Dates 

19 June to 28 June 2024

02 July to 11 July 2024

19 July to 27 July 2024 

BANGLADESH

Eid festivities are expected to sustain current market stagnation and slight price decreases until early July. 

The market has remained stagnant with no notable changes observed recently. 

Local market prices have experienced a slight downturn, decreasing by approximately. With the approach of Eid, the region is gearing up for celebrations, resulting in the closure of recycling units for 10-15 days. 

These market conditions are expected to persist until the first week of July, reflecting the typical seasonal slowdown. 

The World Bank forecasts that Bangladesh’s economy will grow to 5.7% in the fiscal year 2024-25 and increase slightly to 5.9% the following year. This growth is expected to be fueled by an increase in private consumption and the execution of major investment projects. 

Beaching Dates 

22 June to 25 June 2024

05 July to 08 July 2024

21 July to 24 July 2024 

PAKISTAN

The market reacts to budget changes with new tax adjustments and removed exemptions. 

The recent budget has introduced minimal changes to duties but has removed tax exemptions previously granted to underdeveloped areas, impacting the competitiveness of the steel industry. 

The 18% sales tax on scrap sales has been abolished, with manufacturers now required to pay sales tax at the point of sale instead of at purchase. Market participants are currently assessing the potential impacts of these changes on the industry. 

Business communities and traders’ associations across Pakistan have expressed strong reservations about the PKR 18.9 trillion federal budget for 2024-2025, described as ‘anti-trader.’ Aligned with IMF requirements, the budget has faced criticism from major commerce chambers with leaders calling it draconian. 

Beaching Dates 

Throughout the month 

TURKIYE

 Market activity slows down as the upcoming holiday week impacts operations. 

The market is currently experiencing a slowdown as the upcoming holiday week impacts activity. 

The World Bank has revised its growth forecast for Turkiye, reducing the 2024 GDP growth projection from 3.1% to 3%. Additionally, the 2025 growth forecast was cut from 3.3% to 3%. The bank anticipates a growth rate of 4.3% for the Turkish economy in 2026.

Beaching Dates Throughout the month