Bangladesh Could Lose Top Position in the Global Shipbreaking Market

 

With global ship demolition at record low levels, Bangladesh’s shipbreaking industry has reported that 2024 saw a massive drop in scrap ship imports. Only 144 ships were sent to Bangladesh last year for recycling, equivalent to 968,000 GT, the lowest since 2005. As the leading global ship recycling destination, Bangladesh usually processes at least two million GT of end-of-life ships, according to the sector’s data for 2023. The peak year for the Chattogram-based industry was in 2021 with 280 ships (2.73 million GT) demolished.

However, 2022 marked an inflection point as ship recycling imports fell to 1.14 million GT. At the time, factors such as the start of the Russia-Ukraine war were blamed for the drop. But disruptions in the shipping industry continue to multiply, leading to fewer ships being sent for demolition. This became exacerbated last year as Red Sea crisis led to demand for extra capacity in shipping, including older vessels designated for recycling.

Further, demolition prices fell significantly over the course of 2024, from a high of $600/LDT (Light Displacement Tonnage) in Q1 to $450/LDT by end of December, according to data by demolition ships cash buyer GMS. This has left many yards in South Asia in a state of limbo, with some opting for a temporary closure.

While an uptick in recycling markets is expected in 2025, the long-term sustainability of yards in Bangladesh will depend on how they pivot their operations for global environmental compliance. The Hong Kong Convention (HKC) on safe recycling of ships will take effect on June 26. Yards are therefore expected to comply with standards set by the HKC. But some industry analysts have said that Bangladesh has not done enough to get its yards certified under HKC. Unfortunately, this could see Bangladesh lose its top position in global ship recycling to India.

“With over $100 million funding from international donors, India has developed 120 green yards on the coast of Alang in Gujarat to recycle ships following the HKC. In contrast, Bangladesh has developed only five green yards in the last 10 years, which are not enough to compete with India. This means that Bangladesh is likely to lose its top position this year,” Anam Chowdhury, President of the Bangladesh Marine Officers Association (BMOA) told the Business Standard newspaper.

According to 2023 data by India’s ratings firm Care Edge, Bangladesh accounted for 46 percent of the global gross tonnage dismantled in the year. India was second, accounting for 33 percent.