Bangladesh and Pakistan, as two major players in the ship recycling market, are experiencing different conditions due to capacity shortages and high demand in Bangladesh and declining domestic prices in Pakistan.
High Demand in Bangladesh
In Bangladesh, the shortage of recyclable ships and strong demand from recycling yards have led recyclers to offer bids above local steel market prices. The number of licensed ship recycling facilities (DASR) has increased to 39, and competition for attracting limited capacity is intensifying. Last week, only a few ships were offered for recycling, but a dry ship was transferred to Chittagong at higher prices.
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Declining Prices in Pakistan
In contrast, conditions in Pakistan are moving towards declining prices. Weak domestic demand and access to imported metal materials from Europe and Iran have led to a reduction in steel prices in this country by $27 per ton. Ship recyclers in Pakistan have lowered their bids by $15 to $20 per ton, and interest in dry ships remains limited.
Rakesh Ketan, CEO of Wirana Shipping, stated that "the ship recycling market does not operate as a single regional market. Bangladeshi recyclers offer higher bids due to capacity shortages and high demand, while Pakistan is moving towards lower prices due to weak demand and abundant imported materials."
India also has a more stable situation between these two markets. Local steel prices in this country have decreased by $18 per ton, but Indian recyclers have kept their bids relatively stable. Last week, LNG and tanker ships were introduced for recycling, but due to price differences, sales to Chittagong seem more likely.
Wirana predicts that overall recycling supply will remain slow in the short term. However, LNG ships with steam turbines and small dry ships could be the next source of recyclable ships.
The market differentiation between Bangladesh, Pakistan, and India indicates that ship owners need to pay more attention to regional steel price changes when considering the sale of end-of-life ships. The demand from yards, access to financing, available capacity, ship positioning, and delivery costs can significantly impact the final outcome.
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