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Shipbreaking in Pakistan on the rise again.

Shipbreaking revived in Pakistan after the government rationalized the duty structure, making it more attractive for the scrap dealers to procure vessels abroad and bring them back home. The retired ships were brought with their own power and. if they happened to be 'dead' ships. under tow. Ships scrapped in the Middle East are generally sent to Pakistan because of proximity considerations. For Pakistan, the stability of prices in the steel market is another favourable factor. The downtrend has been arrested and prices are fairly steady at higher levels. This is mainly because of the substantially improved demand for steel following the government's stress on developing infrastructure and house building. Several new public utilities requiring large inputs. of steel are taking shape and the market will, therefore, remains attractive for shipbreakers.

According to a report published in the "Khaleej Times," the emergence of Pakistan as the world's second largest shipbreaking nation, next only to Taiwan, is a logical outcome of that country's policy of encouraging scrap generation from shipbreaking. How long the demolition activity will endure will depend on What fiscal policy Pakistan follows. There are fears of fresh taxes in the May budget in the wake of billets vs scrap trade war which might affect activity. But the newly-achieved position may induce caution, it is learnt. The striking aspect of Pakistan's shipbreaking industry is the growing preference or larger-tonnage vessels. Instead of beaching several smaller vessels, the breakyard contractors are handling bulkers. The plate steel yield from larger vessels, especially tankers, is substantial and the employment opportunities are also high. The positive long-term appraisal of the shipbreaking industry and the expectations of continued supply of ships for scrapping point to sustained demolition at the reactivated yards. The country had created 120 shipbreaking yards. These handled ships of varying sizes but mainly the smaller vessels. In terms of the recovered steel, the yards had yielded as much as 1.5 million tonnes. Knowledgeable sources say that the potential is for 2 million tonnes. But there is some disquiet about expanding capacities and acquiring more ships in the scrap market because of the fear of taxation. Also, there is a lobby favouring the import of shredded steel instead of the entire ship.

The shipbreakers of Pakistan who had Specialized in vessels of 5000-tonne capacity are now going for six times larger sizes. A large ship also takes more berth space than would be the case with the smaller ones. The total number of ships broken up at Gadani since October is placed at 25. Another 30 are booked. Considerable expertise has been developed in negotiating purchase of scrap ships, especially in the UAE which has emerged as a key source of ship supply. There is likely to be some 30 million ton nos ships for scrapping this year.
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Publication:Economic Review
Date:Apr 1, 1993
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