Shipbreaking industry may face negative growth, eventual closure

Faced with growing demand for quality steel and large investments by big companies to manufacture such products, the local ship breaking industry may face negative growth and eventual closure, industry insiders said.
According to a ship breaking association sources the industry is not expanding though demand for scrap is rising every year.
Apart from quality awareness for good steel products it is also a matter of hassle to import old ships because of "red tape in the government system," he said.
Though still major percentage of the requirement is being met locally, the manufacturers are increasing their import for pure billets, he said.
They are also making new investments to manufacture high quality steel products.
Bangladesh Ship Breakers Association (BSBA) president Hefazatur Rahman said yearly demand for scrap iron is about 3 million tonnes, of which 2.3 million tonnes are met from the ship breaking industry and the rest is being imported.
He said the demand for scrap iron in the rerolling and steel mills are increasing by 20 per cent every year due to construction of high rise buildings.
He said but ship breaking is not expanding as per the increase in demand as people prefer quality products for high rise buildings and other establishments.
Habib Steels Limited managing director Yasin Ali said till now local rerolling and steel mills are dependent on scrap as their raw materials. But the growth of ship breaking industry is not taking place and in some cases many ship breakers have closed their business establishments.
He said within next five years ship breaking industry may face negative growth and eventual closure.
In line with growing demand for steel products due to then booming housing and other infrastructure establishments, ship breaking saw a good growth and the demand was met from local mills, another BSBA source said.
He said but due to large scale investments by some big conglomerates and their aggressive marketing policy, people are preferring quality steel and iron products.
To meet demands for such high quality products the manufacturers are importing pure and fresh billets, he said.
The BSBA source said the process to manufacture billets from local scraps is very costly and in some cases local scraps are not up to the quality of fresh billets.
The BSBA president said currently there is no bar on importing scrap ships from the government side.
He said it is more of a hassle now to import a scrap ship than in the earlier days as the government wants different 'clearance' papers, he said.
Mr. Rahman said the ship breakers are adhering to all the rules and regulations required by the government to run the ship breaking yards.
He said Bangladesh can meet demand for steel materials locally that would add more value along with generating employment opportunities if the sector is supported by the government.