Synopsis:
With more than 140 recycling yards, Alang-Gujarat, India, is home to some of the biggest ship recycling facilities in the world. India is the second-largest contributor to the worldwide gross tonnage (GT) demolished in CY23 with 33 percent. Bangladesh took up 46% of the handling.
• Compared to CY21, the worldwide ship-recycling business saw a 50% decrease in CY22 and CY23. in terms of the amount disassembled, as a result of fewer ships being available for disassembly and higher price longer travel times and rising freight costs necessitate additional cargo capacity. Furthermore, the In FY23 and FY24, Bhavnagar’s heavy melting scrap prices declined, which negatively impacted the Indian ship recycling industry.
- There are more outdated ships continuing in service as a result of rising maritime capacity demand, steady new vessel additions, and a decrease in ship recycling activities. convergence of variables including steel scrap and freight price stability with an anticipated rise in the supply of outdated
ships suggests that ship recycling will increase in the future.
- Despite volume declines, CARE Ratings Limited (CARE Ratings) rated firms have maintained consistent turnover.
- expansion as a result of greater steel scrap sales realizations between FY19 and FY22. Nevertheless, profit margins declined in
- FY23 and FY24 with scrap prices softening from ₹54,400 per tonne in April 2022 to ₹36,600 per tonne in
- March 2024, though remained above FY19 levels of ₹25,450 per tonne.
Present state of the ship recycling sector:
perspectives from India and across the world The ship recycling business in India plays a vital role in the worldwide marine industry. The ship-recycling sector is dominated by the top four nations, Bangladesh, India, Pakistan, and Turkey, which demolish over 90% of the world’s ships. amount of ship recycling. The sector has continuously been driven by Bangladesh and India, with contributions from other nations were erratic and typically less.
The number of ships recycled in the ship-recycling business decreased from CY17 to CY23, with CY21 seeing particularly high activity. After surpassing 600 ships in prior years, the number of ships disassembled in CY22 and CY23 dropped to 443 and 444 ships, respectively. Volume (GT) in CY22 and CY23: 7.17 and 7.47 million worldwide GT were disassembled as opposed to 12–23 million GT in the five CYs prior. India’s portion of the world’s recycling industry was around 27% in the past, but in CY22 and CY23, it increased to almost 33%, indicating a growth in its contribution despite worldwide reductions. India disassembled 2.26 and 2.47 million in CY22 and CY23, respectively, in terms of volume. GT, in that order.
Elements Affecting Ship Recycling Operations
Numerous variables impact the ship-recycling sector in India, such as worldwide trends in ship recycling, the need to balance the development of transportation capacity with ship-recycling activities, and variations in the Baltic Dry Index (BDI). Heavy melting scrap costs in Bhavnagar. Comprehending these components is crucial to forecasting future course. of the ship recycling sector.
Increasing shipping capacity and engaging in ship recycling
A decline in ship recycling worldwide together with a steady increase in shipping capacity in recent years has highlighted the rising number of outdated vessels that are still in use. As more modern, effective boats are released, Older ships lose operational viability more quickly. This trend creates a rising need for ship recycling, as operators seek to retire aging vessels that are no longer economically feasible to maintain. The reason for the increasing proportion of ageing vessels in operational fleet includes post-pandemic higher freight prices (indicated by BDI) and volatility in heavy melting scrap prices with downward trajectory in the past two years.