Ship recycling industry to grow to 3.8-4.2 million GT in 2025: report | the news

India's ship recycling industry is expected to grow at a CAGR of around 10 percent during CY26-CY28, he said, with the expiration of the Baltic Dry Index, stabilization of heavy scrap prices and increased operation of obsolete ships. , suggesting that more ships will enter the recycling market after CY25

According to Shah, countries with developed infrastructure and green recycling facilities are expected to attract a large share of ships in the future.

India's share of the global recycling industry was around 27 percent in the past, which increased to around 33 percent in CY22 and CY23, reflecting its increased share amid the global economic downturn.

CareAge reported that in terms of volume in CY22 and CY23, India crossed 2.26 million and 2.47 million GT respectively.

Ship recycling companies are supported by a favorable financial structure resulting from low debt levels in the ship recycling business, low fixed overhead costs and the employment of contract workers. Moreover, the convergence of factors such as the stability of freight prices and steel scrap prices, along with the expected increase in the availability of obsolete ships, suggests that ship recycling activities will continue, he said.

It also said that the decline in global ship recycling activity, coupled with the steady expansion of shipping capacity in recent years, continues to highlight the growing number of obsolete ships.

As newer, more efficient ships come to market, older ships become increasingly difficult to control. This trend is creating a growing demand for ship recycling as operators seek to retire aging ships that are no longer economically feasible to maintain, the ratings agency said.

According to the report, activity in the Indian ship recycling sector slowed down in FY23 and FY24 due to the increase in heavy scrap prices.

Heavy scrap melt prices at Bhavnagar in Gujarat rose from Rs 28,800 per tonne in August 2020 to Rs 54,400 per tonne in April 2022 on increased demand for steel amid supply chain disruptions and economic recovery efforts after the pandemic.

However, after reaching the peak, scrap prices started to decline, reaching Rs 39,900 per tonne in December 2023. From January 2023, prices stabilized at between Rs 36,000 and Rs 44,000 per tonne.

This recent stabilization suggests that the market has adjusted to post-pandemic conditions, providing a more predictable cost structure for scrap-dependent industries, CareAge said.

The Indian ship recycling industry is an important part of the global maritime sector – the four largest countries – Bangladesh, India, Pakistan and Turkey – dominate the ship recycling industry, accounting for over 90 percent of the global ship recycling volume, according to ICRA.

In India, Alang in Gujarat has one of the largest ship recycling facilities in the world with over 140 recycling yards.