India is becoming the destination of choice for demolitions on the Indian sub-continent, after a lack of US dollars in Pakistan and Bangladesh has made banks there unwilling to offer letters of credit to scrapyards.
Due to this, Euroseas’ 2001-built 5,610 TEU Akinada Bridge, which was initially sold for demolition in Gadani, Pakistan, has been diverted to Alang, India.
Global Marketing Systems (GMS), one of the largest buyers of ships for scrap, said in its report released on 9 January, that even as more boxships are set to be recycled amid the poorer freight market, the financial situation in Pakistan and Bangladesh has started to become a real cause of concern to the industry.
GMS said, “Governments in both countries are now unwilling to sanction fresh letters of credit from their precious (and dwindling) US dollar reserves. For the time being, the only sub-continent market of any reliability remains India, and whilst the supply of vessels remains mercifully low, prices are managing to hold up somewhat in Alang while the number of small ship arrivals at Chattogram’s waterfront has started to pick up in 2023.”
Vessel-tracking data shows that Akinada Bridge, which was sold in late December 2022, arrived at Alang on 5 January.
Greek broker Intermodal said that the financial issues in Bangladesh and Pakistan have necessitated the International Monetary Fund’s assistance.
Limits on letters of credit meant that many scrapyards could not buy ships, a situation not helped by the weakening of the Pakistani rupee against the US dollar.
Intermodal noted, “As far as India is concerned, the country is set to keep its leading position and prices are expected to stay elevated as various vessels have been sold to local breakers this week.”
Among the few container ships recycled in Bangladesh recently was the 1990-built 1,248 TEU Mathu Bhum, which Regional Container Lines sold to Dubai-based buyer Last Voyage for US$3.16 million for recycling in October 2022. The vessel arrived at Chattogram, Bangladesh, on 29 December 2022, and Arab Ship Breaking & Recycling demolished the vessel around 7 January.
