With just 219 ships arriving on the shores of Alang to be broken and recycled during the financial year 2018-19, business has hit a 10-year-low at this ship-breaking yard in Gujarat.
Figures sourced from the state-run Gujarat Maritime Board (GMB) that manages and regulates the ship breaking activities at Alang reveal that during the year 2008-09, 264 ships had arrived at the yard. These numbers kept on improving and in the year 2011-12, ship breaking business witnessed a historic high when 415 ships beached on the shores of Alang.
Officials say that ship breakers at this yard in Bhavnagar are facing a stiff competition from neighbouring Pakistan and Bangladesh due to stricter environmental norms here.
The arrival of vessels at the ship breaking yard has been constantly going down each year. Currently the yard is operating at 50 per cent of its capacity, says Captain Sudhir Chadha, Port Officer at Alang, which has over 150 plots that carrying out the ship breaking.
Currently the business has dipped 47 per cent of the high recorded in 2011-12. During this peak, ship breakers at the yard had broken ships having a cumulative Light Displacement Tonnage (LDT) of 40 lakh a year.
Last year, lowest arrivals were noticed during the month of August with just 11 ships having a total LDT of over 89,900.
Competition from the neighbouring ship breaking yards in Pakistan and Bangladesh is being cited as the reason for the poor performance of Alang.
Pakistan and Bangladesh are very aggressive buyers. We cannot compete with them. If the ship breakers at Alang offer as much as Pakistanis or Bangladeshis, the business becomes unviable here, says Captain Chadha.
Ship breakers at Alang point out that the competition from Bangladesh is currently more intense than Pakistan. Bangladesh has left both Indians and Pakistanis behind. During the bidding process, Bangladeshis are paying USD 40 more per LDT than us. Six months ago, we faced similar competition from Pakistan, which has now gone silent due to the volatility in their currency, says Haresh Parmar, a ship-breaker at Alang and honorary joint secretary of Ship Recycling Industries Association.
Parmar also points out the ship recyclers spend USD 15-20 more while cutting down a ship as they adhere to the stricter environment laws in India. Compared to India, there is a lot of relaxation in Pakistan and Bangladesh and so they are able to pay higher rates for the ships. Secondly, the steel industry in India manufactures steel from ingot and billets. So the steel plates from the ships are largely sold as scrap. On the other hand, our competitors in Bangladesh and Pakistan are able to directly manufacture TMT bars from the steel sourced from the ships.