Only 136 ships arrived for recycling in Alang between January and December 2023 as compared to the 141 in 2022. This shows that the world’s largest ship recycling yard in Alang is facing the severe slowdown in nearly a decade.
There is a sharp decline in ship arrivals due to the Red Sea crisis and high freight rates. According to the information, out of 130 only 30 plots are currently operational.
Many ship recyclers believed that 2022 was the worst year with the number of ships dismantled falling from 205 in the previous year to 141. But 2023 proved to be even worse. Still, there were no signs of improvement this year also as from Jan to March 15 only 25 ships came for recycling, said Haresh Parmar, secretary of Alang Ship Recycling Association.
“Labourers have worked for only 15 days in the last 2.5 months. In 2023 the ships arriving in Alang was lowest in a decade, said Parmar.
Several factors were responsible for the current state of ship recycling industry. “The freight rate continued northward journey even post-Covid period. As the ship operators got good freight rates they stopped or delayed sending ships for recycling. In addition, the Red Sea crisis has increased freight charges manifold,” said Parmar.
The Red Sea is the access point to the southern entrance to the Suez Canal, which is an important and busy shipping channels in the world. For ships using the canal the distance between Asia and Europe is reduced to almost half. The crisis in Red Sea began in October 2023 with the Houthi rebels in Yemen launching missiles on container ships in mid-sea as a response to Israel’s attack on Gaza. To play safe, many shipping firms suspended operations, while some diverted vessels around the Cape of Good Hope in Southern Africa and then up the west side of the continent. This detour increased the journey by up to two weeks.
Haresh Parmar, secretary of Alang Ship Recycling Association said that in India there is no compulsion for the steel industry to use recycled steel. “The government should mandate the use of recycled steel, at least, for all the government projects,” Parmar added.
Another major reason impacting business at Alang is the recycling rates offered by Bangladesh and Pakistan which are much higher. The Alang ship breakers pay $500-510 per tonne while Bangladesh pays $540-550 and Pakistan offers $525-530.
“We used to get Rs 45,000 per tonne for the melted scrap in 2021-22 which we sold in the market. That price has come down to Rs 33,000 per tonne. This has drastically reduced our capacity to buy old ships. The offshore drilling ships also did not come for dismantling this year,” said a leading ship recycler Mukesh Patel.
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