India: Scrapped ship imports plunge by 50% in Aug’20

Alang, one of the largest ship demolition destinations has seen a sharp fall in ship breaking import by 50.6% m-o-m in Aug’20, according to provisional data maintained with SteelMint.

The total volume of ships demolished in the Alang port, India was reported at 167,715 LDT (17 ships) in Aug’20 as against 339,707 LDT with 20 number ships in Jul’20.

The key factors are:-

• High cost: The scrapped ships prices reached 4 month high & stood around $360/LT (containers) as most of the end buyers were refusing to commit any sales & currently in wait & watch mode.
• Falling number of operational plots: As per Gujarat Maritime Board (GMB), there are roughly 150 recycling plots provided on long term lease basis to ship breakers and recyclers & out of these, nearly about 90 were operational before the Covid-19 pandemic which has now come down to 75.
• Stiff competition from Pakistan and Bangladesh: Most of the ships diverted to nearby countries & Indian ship recycling industry is also facing tough competition from neighbouring countries which are offering more competitive prices for vessels and are enjoying better domestic steel prices like Pakistan dealing containers at $370/LT.
• Inspection taking too long: Due to the pandemic reason, vessels undergo necessary inspection and approval process by the customs and other relevant departments after which they are dismantled and take more than average time due to limited staff & officials. Due to this reason buyers are holding their new booking.
• Seasonal impact: Due to lock down, Alang has not only impacted capacity utilisation in terms of vessel breaking and recycling, but monsoon has also led to a fall in demand and arrival of vessels.

South Asia’s overall imports plunged

Furthermore, in August ’20, a total of 34 ships were demolished in India, Bangladesh & Pakistan, recording a fall of about 8%.

• The total quantity breached in the port of Chittagong (Bangladesh) was recorded at 73,223 LDT (7 ships) in Aug’20, recording a fall of 61.5% m-o-m as against 190,082 LDT in Jul ’20.
• While in the Pakistan market, imports volume fell to 67,495 LDT (10 ships) on m-o-m in Aug ’20 as against 87,254 LDT in Jul ’20.