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Alang’s breakers benefit from shipping industry woes

India – A decline in the fortunes of the global shipping industry has boosted Indian shipbreakers in Alang despite stiff competition from Pakistan, Bangladesh and China. With freight rates dropping 98% in less than six months, Alang is expected to exceed the figure of 435 ships dismantled in 2011-12.‘Last year, over 40 million deadweight tonnage (DWT) was scrapped,’ says Daniel Chopra, managing director of Doehle Danautic India. ‘Nearly 55 million DWT of the global tonnage will be sold this year. This will yield approximately 15 million tons of steel.’ He suspects that countries like Bangladesh will meet half their steel demand from the scrap industry. ‘We expect that the demolition business will peak this year and continue to be good until 2015,’ he adds.

Manish Gupta, head of industry agency Crisil Ratings, observes: ‘Efficiencies of scale and strong growth opportunities will strengthen the business risk profiles of India’€™s shipbreakers. However, the sector will remain vulnerable to key risks such as environmental concerns, economic cycles, sharp movements in scrap steel prices, and fluctuations in forex rates.’

According to Gupta, around 55 million of the 180 million gross tonnage of global shipping capacity that is over 20 years old will be scrapped in the next two years.

Recent data from the Ship Recycling Industries Association reckons the Alang hub is worth some US$ 2 billion per year in turnover terms and employs some 50 000 workers.

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Source: The Times of India

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