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Pakistan ship recycling yards - upgrade or die

Pakistan’s Gadani Beach could become a ghost town as the ten-kilometre strip, home to more than 130 shipbreaking plots, fails to adapt to the Hong Kong Convention rules.

Paul Bartlett, Correspondent

July 3, 2023

2 Min Read
Gadani ship breaking yard in 2016
Gadani shipbreaking yard in 2016Photo: Naqiyah shabbir - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=58636236

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. 

Related:IMO ship recycling convention to finally come into force in 2025

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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About the Author

Paul Bartlett

Correspondent

UK-based Paul Bartlett is a maritime journalist and consultant with over four decades of experience in international shipping, including ship leasing, project finance and financial due diligence procedures.

Paul is a former Editor of Seatrade magazine, which later became Seatrade Maritime Review, and has contributed to a range of Seatrade publications over the years including Seatrade’s Green Guide, a publication investigating early developments in maritime sustainability initiatives, and Middle East Workboats and Offshore Marine, focusing on the vibrant market for such vessels across that region.

In 2002, Paul set up PB Marine Consulting Ltd and has worked on a variety of consultancy projects during the last two decades. He has also contributed regular articles on the maritime sector for a range of shipping publications and online services in Europe, Asia, and the US.

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