Scrap movement at Alang’s shipbreaking yards has resumed after a couple of weeks. The activities were suspended due to the strike announced by transporters protesting against skyrocketing fuel prices amid stagnant freight charges, as per latest SteelMint reports.
What happened?
The usual activities in ship scrapyards –like cutting, segregating and loading — were being carried out normally before the pandemic but loading charges of INR 100-120/tonne (t) was imposed by the Ship Recycling Association of India (SRIA) during the first wave of Covid-19, to provide monetary support to the workforce as volumes were very negligible amid complete lockdown and most of the mills remained idle.
Further, the Alang Sosiya Truck Transport Association demanded a freight hike of 30-35% a month ago but which went in vain and a strike was announced on 26 Jul’21. The main factor behind a proposed hike was the skyrocketing fuel charges which are not feasible for smooth running of the yards with the current freight charges of INR 350-375/t from Alang to Bhavnagar, a distance of 50-52 km.
Associations like the Bhavnagar Induction Furnace Development Association (BIFA), Gujarat Re-Rolling Mills Association, Bhavnagar Profile Cutting Association, North Gujarat Rolling Mills Association and Sihor Steel Re-Rolling Mills Association have held meetings with SRIA to inform that loading charges of around INR 100-120/t which were levied a year ago, should be removed as the transport association’s latest demand of a freight hike of 30-35% will lead to higher costs.
After several meetings with the various associations, SRIA has given verbal assurance of waiving the loading charge of INR 100/t and will offer material from 12 Aug’21 as per yesterday’s meeting. But a written communication is yet to be delivered.
Being a scrap-based region, Bhavnagar-based induction furnace units luckily managed to procure melting scrap from surrounding markets amidst sufficient availability but re-rolling mills are still struggling to procure plates which are generally bought from ship scrapyards.
India’s largest shipbreaking scrap yard or one of the largest in the world, located in the west coast in Alang, Gujarat, has had yearly average imports of around 2,235,267 light displacement tonnage (LDT) and monthly average imports of 186,272 LDT from CY’16 to CY’20.
Imports in Jan-Jun’21 were recorded at 802,271 LDT while 152,308 LDT notified in Jun’21 was 6% higher against May’21. No major imports were heard in Jul’21 owing to aggressive buying from neighboring countries.
Alang roughly houses 180-190 plots and close to 80-100 plots are active with regular supplies to induction furnaces as well as stand-alone rolling mills in the surrounding Gujarat markets. Sometimes inter-state transactions happen if prices are favourable.
What may happen
Trade sources said that the transportation strike may end soon with the transporters and buyers coming to a settlement of 15-25% hike against the proposed 30-35%. Further, the buyers can get written confirmation from SRIA in the next 3 to 4 working days maximum and regular transactions will be resumed accordingly.
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