India’s Alang ship-breaking yard sees lowest turnover in over a decade

Asia’s biggest ship-breaking yard at Alang in Gujarat witnessed one of its lowest turnovers in over 12 years, with just 131 ships being beached or grounded in FY23. In comparison, 209 ships were beached in FY22 and some 415 vessels in 2011-12, the best year for the yard.

Apart from the competition from the neighbouring countries, the reduced orders from the steel industry – since a quality control order is in force – are being stated as a cause.

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Ships beached in Alang in FY21 was 187, 202 in FY20, 219 in FY19 , 253 in FY18, 259 in FY17, 249 in FY16, 278 in FY15, 295 in FY14 and 394 in FY13.

Beaching is when a ship is laid on a tidal mudflat, and the vessel is grounded deliberately during high tide. Breaking ops take place during the low tide. This is a popular process in South Asia.

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In a representation to one of the Ministries, the ship recyclers – through their association – said the “cluster has come to a standstill” and is “sinking”.

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On light displacement tonnage (LDT) – the weight of the ship in its entirety, including permanent equipment like hull, machinery, etc but not its cargo – numbers in FY23 was 11,47,481 LDT, a 70 per cent drop over FY12 (38,56,072 LDT); while on YoY basis LDT dropped 22 per cent (from 14,56,655 LDT in FY22).

Changing Norms

According to a government official, the sharp fall in numbers is due to the Bureau of Indian Standards (BIS) decision to change norms for TMT bars; apart from other factors.

In 2012, the BIS deleted TMT bars of over 6 mm diameter manufactured from recycled steel plates from its list of approved products. It is now mandatory to produce certification of raw materials used for manufacturing TMT bars. Ship recyclers say this is difficult on two grounds – ships come in from countries like Japan, and others procure the ship building material from different countries. Secondly, ships coming to Alang are over two years old, so getting such old records is not always possible.

“Industry was badly hit because of this, claim ship recyclers, and this is what they have put forward in their representations to the Centre too,” the official told businessline.

Other factors

Bangladesh and Pakistan - the two competing countries to India’s Alang - offer rates of $50–100 per LDT, more than the rates offered by Indian recyclers making it attractive for shipowners. In India, an additional $50 per LDT has to be incurred for international certification and compliances.

This apart, factors like rate parity with the US dollar and restrictions by the EU also play some part in slowing down arrivals.

As per a SteelMint report, in India, prices have remained steady w-o-w with the overall supply of vessels declining. Initially, at the beginning of the year, an upsurge of tonnage was observed, which has now diminished drastically, putting the country behind Bangladesh.

Last week, Augusta II (9,920 LDT), an oil tanker, arrived at Alang and Leonard (7,852 LDT), a container was beached. The total tonnage at Alang Port was 27,418 LDT.

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