Toxic Trade News / 3 May 2008
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Indian ship breakers lose business to Bangladesh
by SteelGuru
 
3 May 2008 – BS reported that, with Bangladeshi ship breakers offering around 23% more for steel scrap than India, Indian ship breakers are in trouble and some of them may have to close shop. Bangladeshi companies are offering INR 29,600 per tonne for scrap steel compared with INR 24,000 per tonne that the Indian players are paying.

Bangladesh has emerged as a major ship breaking destination in South Asia with an average of 150 vessels to 200 vessels being scrapped there every year. Pakistan, on its part, is competing with India by scrapping an average of 70 vessels to 90 vessels in a year as compared with India's 120 vessels.

Both India and Pakistan generate around 4,000 tonnes of scrap steel per vessel, much less than Bangladesh, which generates 12,000-15,000 tonnes of scrap steel per vessel. Bangladesh can offer higher prices as most steel manufactured there has scrap as the basic raw material.

Mr Nikhil Gupta joint secretary of Ship Recycling Industries Association of India said that "One reason why Bangladesh is offering more is because it does not have any other major source for making steel. For that, it has kept the duties low. Because of this, Bangladesh has managed to attract high-tonnage vessels. Neglected vessels with lesser tonnage make their way to yards in India or Pakistan. Now with Pakistan offering a higher price, it is in a better position to attract more vessels."

Mr Gupta said that their business is going through a lean phase. Between 1995 and 2001, the industry employed over 45,000 people per annum, which has now come down to 6,000.

Industry experts said that in the last 5 years, because of the boom in the shipping industry, a number of old vessels have been overstretched. Due to global economic slowdown, freight rates are correcting and with global steel prices ruling higher, shipping companies will be able to command more for their scrap vessels. However, Indian ship breakers hope the tide will turn in 2010, when the International Maritime Organization comes with guidelines on ship breaking norms. Many Bangladeshi ship breaking yards will have to close down over pollution and labor issues.

 
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