Ship recycling in Pakistan and India in limbo

The coronavirus pandemic has practically paralysed the ship demolition market in South Asia as lockdown measures continue to be introduced across the subcontinent.

Pakistan suspended all beaching and boarding of vessels at Gadani ship recycling yards last week for four weeks. All ship recyclers have been told to strictly comply with the order.

India has also suspended recycling for all ships arriving at Alang whose last port of departure was after March 13.

The ships that departed a port before March 13, will be allowed to arrive at Alang. However, foreign crews will be subject to a quarantine of 14 days at the port of arrival.

Cash buyer of ships for recycling GMS said that several ships have been detained at Alang anchorage this week, with authorities refusing to provide anchoring permissions.

As informed, even those with Indian crew on board are going through rigorous medical checks, questioning, and procedures, before being allowed entry.

“As Pakistan and India close their doors on all foreign ships arriving (with India also canceling all international flights), the reality is that subcontinent recycling locations will remain quiet as long as the coronavirus crisis persists,” GMS said in its weekly market review.

Despite the overall lack of activity given the current market situation, there is interest from some buyers to acquire tonnage, Clarksons Platou Shipbroking said in its report last week.

“Several capesize bulkers continue to be discussed in the arena, but confidence from the cash buyers may restrict numbers placed on the negotiating tables. The market is not flush of cash buyers, several are reportedly facing difficulties with cash flow positions, and there is certainly more strain on those cash buyers active in the current climate.”

Clarksons added that with many ports adopting new restrictions, more owners will seek the ‘as is’ deal to avoid the last voyage to the recycling destinations. Therefore, the cash buyers would have to figure out how they would dispose of the units.

The only subcontinent location that remains open is Bangladesh with several deals concluded this week, according to GMS, as owners scramble to finalize deals before a total global lockdown is eventually enforced.

Namely, Turkey is also expected to halt activities amid reports that vessels are being turned away from Aliaga and that deals are failing, GMS believes.

“As European markets grind to a halt and a non-essential travel bans come into effect at various EU countries, it’s only a matter of time until Turkey follows suit. As such, this unintended closure, should it come into effect, may just be what the doctor ordered, given this markets plummet this week,” the cash buyer said.