Ship-breakers avoid new vessels import on price factor

The country's ship-breaking industry is passing through a very critical situation as a fresh increase of $150 or 27.27 percent in prices of per late displacement tonnage (LDT) scrap ship has compelled Pak importers to avoid new buying.
"Due to growing demand for steel in international market the prices of breakable ships have skyrocketed during the last 15 days to over $700 per LDT from the previous $550," Azam Malik, chairman, Pakistan Ship Breakers Association (PSBA) told Business Recorder on Thursday. Malik, who was apprehensive about the future of an already ailing ship-breaking industry, said fresh price-hike in the prices of demolishable ships had compelled the importers to refrain from new buying.
"At present, due to a substantial price-hike in international market only four ships have arrived at Gadani ship-breaking yards," the PSBA chief said. He expressed fear that the ship-breaking industry, which provides quality raw materiel to the country's steel sector, was likely to collapse if the government failed to heed problems of the importers. "Our ship breakers are avoiding purchasing/importing more ships due to unfeasible local market conditions," he added.
The PSBA chief said around 20,000 workers would become jobless if the most-neglected industry could not get a helping hand from the federal government to face the present crisis. "To provide a breathing line to our ailing industry the government should listen to our problems," he urged.
Inviting the government's attention towards the prevailing market situation, the PSBA chief said for an importer it was hard to find a proper ship for breaking at less than $600 per LDT. Another factor contributing to ship breakers' problems, he said, was the weak currency of the country in international market.
"The prices of scrap ship imports are also becoming difficult due to our currency, which is losing its value against the US dollar," said Malik. Malik also held India and Bangladesh, the arch competitors of Pakistan in the world's ship-breaking industry, responsible for introducing an upward trend in prices.
"India and Bangladesh are offering huge prices to the scrap ship sellers... $700 and $725 per LDT, respectively," he said. On criteria for price-hike, Malik said rates were fixed after evaluation of various factors like made-in of the vessel, government levies, local and international rates, wastage, etc.