Ship-breakers lose business to Bangladesh

Bangladesh has emerged as a major ship-breaking destination in South Asia with an average of 150-200 vessels being scrapped there every year.

Pakistan, on its part, is competing with India by scrapping an average of 70-90 vessels in a year compared with India's 120. Pakistan is offering around about 5 per cent more for steel scrap than India.

Both India and Pakistan generate around 4,000 tonnes of scrap steel per vessel, much less than Bangladesh, which generates 12,000-15,000 tonnes of scrap steel per vessel. Bangladesh can offer higher prices as most steel manufactured there has scrap as the basic raw material.

Nikhil Gupta, joint secretary, Ship Recycling Industries Association of India, said, "One reason why Bangladesh is offering more is because it doesn't have any other major source for making steel.

For that, it has kept the duties low. Because of this, Bangladesh has managed to attract high-tonnage vessels. Neglected vessels with lesser tonnage make their way to yards in India or Pakistan. Now with Pakistan offering a higher price, it is in a better position to attract more vessels".

Gupta says their business is going through a lean phase. Between 1995 and 2001, the industry employed over 45,000 people per annum, which has now come down to 6,000.

Industry experts say in the last five years, because of the boom in the shipping industry, a number of old vessels have been overstretched. Due to global economic slowdown, freight rates are correcting and with global steel prices ruling higher, shipping companies will be able to command more for their scrap vessels, they say.

However, Indian ship-breakers hope the tide will turn in 2010, when the International Maritime Organisation comes with guidelines on ship-breaking norms. Many Bangladeshi ship-breaking yards will have to close down over pollution and labour issues, experts say.