How the ship recycling industry has maintained its leadership in the global market for 9 years

In 1960, the Greek ship MV Alpine ran aground off the coast of Sitakunda due to a tidal wave. For nearly five years it remained stranded on the shores of the Bay of Bengal until it was finally rescued by the Chittagong Steel Company for dismantling.

Later, during the War of Liberation in 1971, the Pakistani ship Al-Abbas was damaged by bombing. After restoration, it was transported to Fauddarhat area of ​​Chattgram, where Karnaphuli Metal Works Limited began dismantling it in 1974.

These incidents marked the birth of the ship recycling industry in Bangladesh, which has since grown into a significant sector, with Chattogram becoming a major center for the dismantling of large ships from around the world. Since 2015, Bangladesh has even taken a leading position in this industry, ahead of other countries in Europe, the United States and South Asia.

Several factors have contributed to the rise in ship recycling in Bangladesh.

The creation of special zones for industry, the growing demand for steel caused by infrastructure projects and the heavy dependence on ship recycling as raw materials played a decisive role.

This expansion led to the development of heavy industry in the Sitakunda region, which greatly benefited the Bangladeshi economy. In addition, the country’s relatively lax environmental regulations have further contributed to the industry’s growth.

The ship recycling industry, which originated in Chattogram in the 1980s, has maintained its leading position since 2015, according to the Belgian ship recycling NGO. This year alone, Bangladesh imported 194 vessels weighing 6,759,633 tonnes for dismantling.

During the same period, India also imported 194 vessels with a total weight of 4,523,347 tons, while Pakistan imported eight vessels with a total weight of 3,731,532 tons.

By 2019, Bangladesh’s imports increased to 236 vessels with a total weight of 7,849,569 tons.

The scale of activity is impressive as most of the large ships are dismantled along the coast of Sitakunda. In 2021, of the 20 large ships dismantled worldwide, 14 – approximately 70% – were sent to various shipyards in Sitakunda, while the remaining six were dismantled in India, Pakistan and Turkey.

According to the Bangladesh Steel Manufacturers Association (BSMA), before 2010, steel production at the country’s factories was about 1.6 million tons. Today this figure has risen to approximately six million tons.

The industry created about 250 small and large factories, creating jobs for almost 500,000 people. There are currently more than 120 steel rolling mills, both semi-automatic and manual, producing a total of 11 million tons of steel per year.

Ten years ago, Bangladesh’s per capita steel consumption was just 25 kg; he is now estimated at approximately 47 kg. This nearly doubling of steel consumption highlights the country’s progress in infrastructure development.

Current investment in this sector exceeds Tk 50,000 crore, reflecting a four-fold increase in production.

Over the past decade, Bangladesh has been transformed by important infrastructure projects including the Padma Bridge, Metro Railway, Bangabandhu Tunnel, road networks, bridges and rural infrastructure. Steel became a critical building material for these initiatives, strengthening the steel industry’s position in the economy.

The country’s GDP growth rate during the same period reached an impressive 7.86%. Notably, half of the raw materials required by the steel industry come from the ship recycling sector, which has expanded to meet growing demand.

Large steel producers often import scrap from abroad, and some plant owners have their own ship recycling facilities. In contrast, small and medium-sized plants rely heavily on the shipbreaking industry for raw materials.

Industry owners say both the steel and shipbuilding industries rely on ship recycling. Slabs from decommissioned ships are used to build inland vessels and other inland navigation vessels.

Moreover, the shipbuilding industry is completely dependent on paint collected from old ships. The Sitakunda area of ​​Chattogram also has a robust market for pipes, furniture, motors, engines and electronic goods refurbished from old ships.

A 2016 report titled “Safe and Environmentally Sound Ship Recycling in Bangladesh – Phase I” published by the International Maritime Organization (IMO) and the Government of Bangladesh highlights the significant contribution of the ship recycling industry to the economy. Between 2011 and 2015, the industry generated an average of Tk5,330 crore (US$770 million) annually and also paid over Tk500 crore (US$68 million) in taxes and duties annually, providing substantial revenue to the government.

In 2015, the value of recovered materials such as pipes, chains and anchors was estimated at Tk 760 crore (US$ 111 million).

According to the Bangladesh Ship Breakers and Recyclers Association (BSBRA), there were once 160 shipyards along the Sitakunda coast. However, by 2019, this number had dropped to 90 due to various factors including price fluctuations in both domestic and international markets, excessive imports relative to demand, political instability and a slowdown in the housing sector.

Since Covid-19, nearly 30 factories have closed due to rising raw material prices in the global market. The recent dollar crisis forced another 40 shipyards to close due to difficulties importing raw materials.

Currently, only 30–35 households function both formally and informally. Once the Hong Kong Convention comes into force in July 2025, only about 20 green shipyards are expected to remain in operation.

Zahirul Islam, Director, PHP Family and Vice President, BSBRA, told The Business Standard: “The ship recycling industry has emerged due to mega projects and expansion of the construction industry. Moreover, the country’s steel industry relies heavily on ship recycling. Our neighboring country, India, has domestic sources of scrap and iron, so they do not have to rely on ship recycling.”

He added: “Big steel producers in Bangladesh import millions of tons of scrap or ships at a time, but small producers do not have this option. They typically collect 30 to 50 tons of raw material scrap from shipbreaking yards every day. There are no difficulties either. in letters of credit (LC) or bank loans, increasing the steel industry’s dependence on ship recycling. These factors have contributed to the expansion of the ship recycling industry in Bangladesh.”