Bangladesh: Drastic fall in import of scrap ships due to poor demand

Import of scrap ships is falling gradually for the last couple of years mainly due to poor development works by the government and downtrend in private investments, industry insiders said.

It fell by nearly 35 per cent in the last financial year (FY-2013-14), statistics showed.

Local importers purchased old ships worth 1.9 million tonnes in the last financial year (FY-2013-14) against import of ships worth 2.35 tonnes in the previous year (FY-2012-13) and 2.72 tonnes in the FY-2011-12, the National Board of Revenue (NBR) data revealed.

“Poor demand in the local market and higher prices of old ships in the international market brought down import of the primary input of re-rolling mills significantly in recent years,” Sheikh Hafizur Rahman, president of the Bangladesh Ship Breakers Association (BSBA) told the FE.

“The prices of old ships increased by around 25 per cent whereas their demand in the country’s re-rolling mills decreased drastically at the same time because of poor development activities both in public and private sectors,” he added.

Currently, an old ship costs around US$500 a tonne in the international market, which was more or less $400 two years ago, Mr Rahman informed.

Showkat Ali Chowdhury, owner of Namrin International, the country’s largest ship-breaking yard, said the business grew tremendously till 2011 because of lower prices of old ships in the international market and higher development activities within the country.

“But investment in the private sector remained almost stagnant for the last couple of years for multifarious reasons like political instability and higher interest of bank loans which brought down demand for scraps in the country,” he added.

The old ships are the main source of making construction steel in Bangladesh. The country’s re-rolling mills melt it after dismantling of huge slabs of steel.

The ship scrap is used to make 40-grade mild steel (MS) rod which has a major market in the country’s housing sector.

The ship-breakers supply around 80 per cent of the country’s annual steel rod demand, which is met from scrap ships.

Mr Rahman said local importers have added 21 more shipyards taking the number to 71 to cope with the increased number of old ships being imported in the country earlier.

Earlier, there were only 36 active ship-breaking yards in Sitakundu, 20 kilometres north of the port city Chittagong. These yards dismantled 110 ships on an average every year. But in the recent years, the number came down to less than 90, he informed.

“Our importers used to beaching four to five ships each week and would finish cutting the same number a week but now-a-days there are many yards which do not cut a ship in three months,” the BSBA president said.

Since FY 2011, Bangladesh dismantled nearly 60 per cent of the ships sent to scrap-yards from across the globe which is now gradually going down mainly because of poor market demand,” said Abu Ahmed Shikder, a leading ship breaker.

However, India breaks around 1.5 million tonnes a year followed by China 1.3 million tonnes, Pakistan 1.0 million tonnes and Turkey around 0.60 million tonnes.
Source: Financial Express