Wave of Change in Ship Recycling: New Era Dawns as Hong Kong Convention Enters into Force
By Mahebub Kureshi, July 1, 2025
As the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) finally enters into force on June 26, 2025 — sixteen years after its adoption — the global ship recycling industry faces a pivotal moment. While the convention is set to reshape maritime recycling practices and enforce stricter environmental and labour standards, significant disparities persist across key recycling hubs, particularly on the beaches of the Indian subcontinent, where the majority of the world’s ships meet their end.
The HKC, adopted in 2009 under the auspices of the International Maritime Organisation (IMO), aims to ensure that ships, when being recycled after reaching the end of their operational lives, do not pose unnecessary risks to human health and the environment. Yet, despite years of dialogue and international pressure, many ship recycling yards — particularly in Bangladesh and Pakistan — remain non-compliant with its standards.
A Tale of Three Nations
The beaches of Alang (India), Chattogram (Bangladesh), and Gadani (Pakistan) have long dominated the global ship recycling trade, collectively handling over 90% of the world’s recycled tonnage. Among these, India has emerged as the frontrunner in HKC compliance, with several yards certified and audited to meet international norms. However, the progress is uneven even there. A number of facilities continue to operate below the required environmental and safety standards.
In Bangladesh, the situation is more pressing. Although the country ratified the Convention in 2023 and has taken steps toward compliance — particularly with the support of international NGOs and financial institutions — many of its yards still lack the necessary infrastructure and safety protocols. As for Pakistan, despite handling an estimated 17% of global recycled tonnage, not a single ship recycling facility is HKC-compliant as of the Convention’s entry into force.
Regulatory Patchwork and Legal Grey Areas
One of the challenges facing ship recycling reform is the complex web of international regulations. Besides the HKC, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes, the International Labour Organisation (ILO) conventions on workers’ rights and safety, and new national frameworks such as the UAE Ship Recycling Regulation (SRR) all play a role in shaping compliance.
The UAE SRR, which also came into force on June 26, 2025, adds another layer to the regulatory landscape. It bans beaching — the process of driving ships onto shore for dismantling — and mandates recycling only in dry docks or equivalent facilities. This marks a significant divergence from traditional South Asian practices and aims to align ship dismantling more closely with international labour and environmental safety expectations.
Complications arise under the Basel Convention, which categorises ships with hazardous materials (such as asbestos, PCBs, and heavy metals) as waste. This classification restricts such ships, especially those flagged under any of the 187 signatory states or the European Union, from being sent to countries without adequate waste management infrastructure. This technically prohibits most European and OECD-flagged ships from being recycled in South Asia.
However, legal experts have argued that this interpretation is not so straightforward. A ship en route to a recycling yard may not be classified as waste until it is formally delivered and sold to the yard. There have been cases where shipowners changed course mid-voyage due to a rebound in freight markets, with vessels returning to commercial service. Such legal grey areas illustrate the need for clearer global definitions and enforcement mechanisms.
Mounting Demand, Insufficient Capacity
According to BIMCO (Baltic and International Maritime Council), the world’s largest shipping association, the demand for ship recycling is set to soar in the coming decade. BIMCO has revised its previous estimate of 15,000 vessels up to 16,000, totalling 700 million deadweight tonnes (dwt) to be recycled between 2025 and 2035. That figure nearly doubles the number of ships and triples the tonnage recycled over the past decade.
This looming wave of end-of-life vessels is driven by two converging trends: stricter environmental regulations requiring older vessels to be scrapped rather than retrofitted, and changing market dynamics, particularly the oversupply in container and dry bulk sectors. However, current ship recycling capacity — particularly in HKC-compliant facilities — falls significantly short of the projected demand.
This mismatch could trigger delays, increased costs, or the risk of shipowners opting for non-compliant yards in pursuit of quick turnarounds and higher returns. Without rapid upgrades in infrastructure and certification, the global ship recycling sector may be overwhelmed, leading to non-compliance, backlogs, and unsafe working conditions.
Spotlight on Pakistan: A Call for Reform
Recognising the risks, the ILO and IMO have launched a joint initiative titled “Safe and Environmentally Sound Ship Recycling and Decent Work in Pakistan.” The program aims to catalyse reform in Pakistan’s ship recycling sector through a series of assessments and capacity-building initiatives.
The ILO recently issued a call for proposals from consultants to identify stakeholders in Pakistan’s ship recycling ecosystem, map policy and legislative gaps, evaluate occupational safety, and formulate a national action plan. The ultimate goal is to transition Pakistan’s industry from informal, hazardous practices to a regulated, sustainable, and HKC-compliant framework.
This comes at a time when Pakistan — and especially the Gadani shipbreaking yard — is in a state of flux. The industry has been in a slump, with fewer vessels arriving and workers facing uncertain employment conditions. While the entry into force of the HKC offers an opportunity for revival, it hinges on the government and private sector’s willingness to invest in compliance and worker safety.
Economic Realities: Price Pressure Across Markets
Even as regulatory changes loom large, recycling prices remain under pressure, reflecting weak global steel markets and cautious sentiment. Data from GMS, the world’s largest cash buyer of end-of-life ships, shows:
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Pakistan leads pricing with rates of:
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$450/ldt (light displacement ton) for container ships
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$440/ldt for tankers
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$420/ldt for bulkers
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India trails by around $10/ldt across all categories.
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Bangladesh offers even lower prices, down by another $10/ldt.
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Turkey’s Aliaga region, the only major recycling centre outside South Asia, posts far lower rates:
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$270/ldt for containers
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$260/ldt for tankers
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$250/ldt for bulkers
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These figures underscore both the dominance and fragility of South Asia’s shipbreaking market. High prices in Pakistan, for example, may attract more tonnage despite non-compliance risks, while lower returns in India and Bangladesh could strain certified yards that have invested in upgrades.
The Road Ahead: Urgency and Opportunity
The coming years will determine whether the ship recycling industry can rise to the challenge of aligning with HKC standards. Governments, shipowners, class societies, and NGOs must collaborate to upgrade yards, provide worker training, and ensure transparency and traceability across the supply chain.
India, with its head start, must continue to invest in scaling up compliance. Bangladesh needs targeted support and funding to convert more yards. Pakistan, long seen as a laggard, now stands at a crossroads, with the potential for reform but facing major infrastructural and policy hurdles.
At the same time, global shipping companies and flag registries must resist the temptation of sending vessels to non-compliant yards purely for higher scrap prices. Robust enforcement, coupled with economic incentives for compliance, will be critical.
As the HKC finally comes into force, the real work begins. For an industry built on dismantling, this could be the start of something new — a cleaner, safer, and more sustainable era of ship recycling.
Author: shipping inbox
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