Alang-Sosiya in Gujarat’s Bhavnagar district–home to the world’s largest stretch of ship-breaking facilities–beached 113 ships for recycling in FY25, the lowest in a decade. The 113 ships sold by fleet owners for recycling translated into a Light Displacement Tonnage (LDT) of 10.06199 lakhs, a Gujarat government official said. Light Displacement Tonnage refers to the weight of a ship’s hull, machinery, equipment and spares and form the basis on which ships are usually sold for scrap. In FY24, Alang beached 125 ships for recycling with a LDT of 9.44069 lakhs whereas in FY23, ship recycling units beached 131 ships, translating into a LDT of 11.47480 lakhs.
At its peak some 15 years ago, Alang beached about 400 ships a year for recycling. Ship recyclers say that booming freight rates forced fleet owners to continue running their old ships, resulting in a smaller number of ships traded for dismantling.
According to Clarkson Research Services, recycling activity is expected to remain soft in the near term, volumes may pick up in coming years, amid the potential for softer shipping markets in some sectors, with strong market conditions having been a factor in holding back the supply of tonnage to the recycling market in recent years.
Alang ship recyclers are banking on the proposed ship recycling credit note scheme announced in the Union Budget and the International Maritime Organisation’s Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) that will enter into force on 26 June this year, to improve their prospects. Under the proposed ship recycling credit note scheme, a credit notes equivalent to 40 per cent of the scrap value of a ship being dismantled in an Indian ship breaking yard would be given to a fleet owner–both Indian and global–with the credit note being reimbursable against cost of construction of new vessel at an Indian yard. With this credit note, the fleet owner can go to an Indian shipbuilder for ordering a new ship and get a rebate in the shipbuilding cost to the extent of the credit note value. To cater to green recycling, some 115 ship recycling yards in Alang have upgraded their facilities for compliance with IMO’s HKC.
