New Delhi: In a recent report, industry experts have projected a substantial expansion of India’s ship recycling sector, solidifying its position as a global leader in this crucial maritime industry.
The findings, released by CareEdge, a prominent ratings agency, paint a promising picture for the future of ship recycling in India.
According to Sajani Shah, Assistant Director at CareEdge, India’s ship recycling industry is expected to experience remarkable growth in the coming years.
The report forecasts that the industry will handle between 2.3 and 2.6 million gross tonnage (GT) in 2024, followed by a significant leap to 3.8-4.2 million GT in 2025. This represents a year-on-year increase of nearly 62 per cent at the upper end of the estimate.
The growth trajectory is expected to continue, with Shah projecting a compound annual growth rate of approximately 10 per cent from 2026 to 2028.
This sustained expansion is attributed to several factors, including the cooling of the Baltic Dry Index, stabilisation of heavy melting scrap prices, and an increase in obsolete ships in operation.
India’s rise in the global ship recycling arena has been noteworthy. In 2023, the country accounted for 33 per cent of the global gross tonnage dismantled, second only to Bangladesh at 46 per cent. This marks a significant increase from India’s historical average of around 27 per cent, demonstrating the country’s growing influence in the industry.
The report highlights the strategic advantages that have contributed to India’s success in ship recycling. Low debt levels, minimal fixed overheads, and a contract-based workforce have created a favorable financial structure for ship recyclers.
Additionally, the convergence of stable freight and steel scrap prices, coupled with an expected increase in the availability of obsolete ships, points to a bright future for the industry.
Alang, located in Gujarat, stands out as one of the world’s largest ship recycling facilities, boasting over 140 recycling yards. This hub has played a pivotal role in establishing India as a key player in the global ship recycling landscape.
However, the industry has faced challenges in recent years. The report notes a decline in global ship recycling activities, partly due to fluctuations in heavy melting scrap prices.
Prices at Bhavnagar, Gujarat, reached a peak of Rs 54,400 per tonne in April 2022 before stabilising between Rs 36,000 and Rs 44,000 per tonne since January 2023.
Looking ahead, the report suggests that countries with superior infrastructure and green recycling facilities are likely to attract a larger share of ships for dismantling.
With strategic advantages, government support, and a focus on sustainable practices, India is well-positioned to capitalise on the growing demand for ship recycling services in the years to come.
