Following the accession of Bangladesh and Liberia to the IMO’s Hong Kong Convention (HKC), the global standard will now enter force on 26 June 2025. It’s been a long time coming, having been originally adopted by the IMO in 2009, but it now has major implications for owners seeking to dispose of end-of-life ships.
Apart from rogue outsiders who still operate vessels in some regions where the global safety framework carries little weight, owners and operators will come under growing pressure to ensure that end-of-life ships are disposed of as safely and responsibly as possible.
As the third largest ship recycling nation, Pakistan recyclers are likely to find it increasingly hard to attract sellers. Unlike the other two ship dismantling ‘subcontinent’ nations – India and Bangladesh – the country’s yard owners and managers have made few moves, if any, to upgrade facilities to meet HKC standards.
“Gadani really has become virtually redundant as a viable subcontinent recycling destination,” declared GMS, the world’s largest cash buyer of end-of-life ships, in its most recent weekly report.
The warning coincides with a deepening economic crisis in Pakistan which has forced the country to seek emergency funds from the International Monetary Fund (IMF). Last week, it was revealed that a tentative agreement had been reached between the state and the IMF for a $3 billion emergency bail-out. However, this has not yet been formally agreed.
One result of the country’s financial crisis is that the central bank has been forced to limit or refuse to issue letters of credit to fund end-of-life ship acquisitions. Therefore significant ship recycling deals have not been possible anyway.
Meanwhile, Eid holidays have resulted in a quiet week spell across the recycling sector as a whole. GMS said that any price ideas that were mooted remain noticeably below the market and not worth considering at this time. “Until we see liquidity issues ease in the industry, we are not likely to make much sense of local markets,” the firm added.
GMS estimates that Bangladesh breakers continue to offer the sharpest prices, with container ships typically at around $625 per ldt, tankers at $605, and bulk carriers $575. Theoretical price levels in India and Pakistan are around $60-80 below these levels. Meanwhile, typical prices prevailing in Turkey last week were $340, $330, and $320 for the three ship types respectively.
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