South Asia: Ship-recycling markets remain resilient despite seasonal slowdown

• Hormuz reopening improves vessel supply expectations
  
  
• Lower freight costs expected to boost vessel flows
  
  

The South Asian ship recycling market showed signs of improvement during the week ended 19 June as easing geopolitical tensions and the reopening of the Strait of Hormuz strengthened expectations of better vessel availability across South Asia. Despite improved sentiment across India, Bangladesh, and Pakistan, monsoon-related disruptions continued to restrict beaching activity and near-term recycling volumes.

Alang: Improved sentiment supported by stronger fundamentals

India's ship recycling market sentiment improved during the week as lower energy costs, easing freight pressures, and a firmer macroeconomic outlook supported confidence. However, domestic steel plate prices at Alang softened to around INR 37,500/t ($396/t) from INR 38,000/t ($401/t) a week earlier amid weaker scrap sentiment.

Despite softer pricing, India remained the most competitive recycling destination in the region. However, monsoon conditions are expected to restrict beaching activity through August, delaying any significant increase in vessel arrivals. Market participants remain optimistic that Alang's large recycling capacity and strong compliance standards will support activity once seasonal disruptions ease.

Chattogram: Strong demand outlook offsets monsoon challenges

Bangladesh's ship recycling market remained firm during the week, supported by stable steel plate prices at around BDT 65,000/t ($529/t) and healthy demand fundamentals. The reopening of the Strait of Hormuz and lower freight costs improved expectations for vessel availability in the coming months.

However, monsoon conditions in the Bay of Bengal continued to restrict beaching operations and limit vessel arrivals. Despite the seasonal slowdown, strong plot occupancy levels and an active letter of credit (LC) pipeline continued to support positive market sentiment.

Gadani: Wartime premium fades as market normalises

Pakistan's ship recycling market remained firm during the week, supported by stable domestic steel plate prices at around PKR 195,000/t ($701/t) and improved confidence following the easing of regional tensions.

However, market participants expect plate prices to soften amid easing geopolitical tensions. In the last 2-3 months, Gadani-based recyclers have had to offer premiums to secure vessels, a trend which is likely to fade as trade flows normalise.

According to market participants, several deals were heard in the last few days.

Romania-origin bulk carrier RON (21,502 LDT) at $485/LDT CFR Qasim.

Djibouti-origin bulk carrier Jenny Lucky at $465/LDT CFR Qasim.

Comoros-origin general cargo vessel Ladonna at $468/LDT CFR Qasim.

Italy-origin vessel Illa at $468/LDT CFR Qasim.

Looking ahead, the reopening of the Strait of Hormuz is expected to normalise regional trade routes, reduce freight costs, and support vessel arrivals across South Asia in the next few months.