Ship-breaking heats up in Asia
Ship-breaking, the act of recycling vessels deemed unfit for further use, plays a major role in providing
scrap for the steel industry. The shortage in
scrap has drawn global attention to the ship-breaking industry, which is especially strong in Asia.
Bangladesh,
China,
India and
Pakistan are among the main ship-breakers in Asia.
Bangladesh and
China apply a relatively low customs duty on the imports of ships to be recycled. At the end of January,
Pakistan dramatically reduced the import duties for ships to be recycled, establishing a fixed rate for the imports of ships for
scrap.
Pakistan announced that it expects to meet 20% of the local demand for steel through ship-breaking.
The prevailing
scrap shortage in the steel industry also spilt over in the ship-breaking industry.
India's ship-breaking industry, which used to provide employment for 35'000 people, recently cut close to 8'000 jobs because it was unable to compete with rivals in the other countries.
Steelmakers in
India, who claim that the ships imported for recycling should be classified as melting
scrap, recently lobbied the government for a duty exemption. The Indian government currently affixes a 5% basic customs duty and an additional 12% countervailing duty to ship imports. Steelmakers argue that an elimination of the duties would impart a major advantage to the ailing Indian ship-breaking industry.