Crisis looms large at ship breaking industry

Al Amin :
The country’s ship breaking industry is now in a big trouble, which hampered construction sector heavily.
The entrepreneurs of the industry are failing to import scrap ships due to complications in opening letter of credit (LC), despite having huge demand for it, the sector insiders said.
They said along with rise in prices of scrap and chemicals, the main raw materials of steel, container and ship fare also increased in the last two years, resulted the production cost of rod has also gone up, having adverse impact on the country’s construction sector.
The imported scraps are used in steel mills to produce billet or iron sheet. The billets are used to make MS products including rods and angles. The demand for MS products in the country is increasing for construction.
In particular, the use of fabricated steel structures has increased. Iron sheet and steel products are also used in making inland vessel and ocean vessel.
Apart from this, new industries being set up in the economic zones and industries are expanding across the country. Due to the implementation of mega projects under the initiative of the government, the demand for steel has increased.
But the country’s ship breakers are not able to supply enough scrap due to decline in import of scrap ships.
Currently, scrap is being sold at Tk60-62 thousand per tonne in the country, according to Bangladesh Ship Breakers and Recyclers Association (BSBRA).
The association also said that a total of 280 scrap ships were imported in 2021 and the weight was 27 lakh 28 thousand 597 tonnes. But, only 93 scrap ships, weight of 7 lakh 69 thousand 215
tonnes, have been imported in first 7 months of this year.
On the other hand, 171 scrap vessels, weighing 17 lakh 23 thousand 600 tonnes, were imported in first 7 months of last year. That means, scrap import decreased by 9 lakh 54 thousand 385 tonnes in a year.
They said Bangladesh Bank has increased monitoring in opening of LCs with a cash value of more than $50 lakh to get relief from dollar crisis. As a result, the ship breaking industry is facing challenges as importing a single scrap ship costs more than Tk150 to 200 crore.
If the government fails to bring the foreign currency crisis under control in a few more months, the imports of scrap ships will come to a complete halt.
In the last two-three months, scrap ship imports have come down, leading to a major wage crisis in many yards. Many yards are now on the way to closure due to reduced ship imports.
BSBRA Senior Vice-President Kamal Uddin Ahmad told The New Nation on Friday said, “Banks are unable to pay dollars for opening LCs to import scrap ships, resulted, the import of scrap ships in Bangladesh decreased to almost half in July.”
“The importers are now unable to open LCs to import scrap ships. It import has gone down since last month. The industry is now heading towards a major crisis,” he said.
Only 8 scrap vessels were imported last July due to LC related complications.