‘No work’: India’s Alang, the world’s largest graveyard of ships, is dying

Alang, Gujarat — historically the world’s largest ship‑breaking yard responsible for nearly 98% of India’s recycling and about a third of global volume — has seen a sharp collapse in activity: from a 2011‑12 peak of 415 ships to only about 20 of 153 plots operating at roughly 25% capacity today, with India’s total demolitions falling from 166 in 2023 to 124 in 2024. The slowdown is driven by shipowners deferring retirements amid a post‑COVID freight boom and higher operational costs caused by geopolitical disruptions (Red Sea attacks and Suez rerouting, plus higher marine fuel costs after Russia‑Ukraine), while Alang’s costly upgrades to meet the Hong Kong Convention ($0.56m–$1.2m per yard) have reduced its price competitiveness versus Bangladesh and Pakistan (which are offering ~$540–550 and ~$525–530 per LDT versus Alang’s $500–510). The result is a collapse in local employment (from ~60,000 to <15,000 workers), strained downstream suppliers and mills reliant on ship scrap, and a structurally altered global ship‑recycling market where regulatory compliance, geopolitics and freight cycles are reshaping where and when vessels are recycled.

Analysis

Alang, Gujarat — historically the world’s largest ship‑breaking yard responsible for nearly 98% of India’s recycling and about one‑third of global volume — has experienced a sharp collapse: peak 415 ships dismantled in 2011–12 versus only about 20 of 153 plots operating at roughly 25% capacity today, and India’s demolitions fell from 166 in 2023 to 124 in 2024. Over its history more than 8,600 vessels (≈68 million tonnes LDT) were recycled there, but employment has dropped from over 60,000 at its peak to under 15,000 workers and local downstream businesses report severe demand erosion.

Primary drivers are commercial and regulatory: shipowners are deferring retirements amid a post‑COVID freight boom and geopolitical disruptions (Red Sea attacks and Suez rerouting) that have elevated freight and marine fuel costs (UNCTAD cited a >60% fuel cost increase), reducing end‑of‑life vessel supply. Concurrently, India’s adoption of the Hong Kong Convention and the 2019 Recycling of Ships Act forced yards to invest $0.56m–$1.2m each to meet HKC standards (106 ASSRY yards received SoCs), raising operating costs and eroding Alang’s price competitiveness versus Bangladesh ($540–550/LDT) and Pakistan ($525–530/LDT) where Alang bids are $500–510/LDT.

The shortfall in incoming tonnage is disrupting the wider recycling ecosystem — more than 60 induction furnaces and 80 rerolling mills, hundreds of retail/wholesale shops, and thousands of migrant workers face persistent strain — and competitors such as Turkiye, Bangladesh and Pakistan have increased take‑share (Turkiye demolitions rose from 50 to 94). The published sentiment_score (−0.5) and market_impact_score (0.18) reflect a moderately negative near‑term outlook; this is a regulatory‑ and cycle‑driven dislocation that will likely persist until freight economics, regional pricing spreads and geopolitical risks normalize.

Key Decisions for Investors

• Monitor leading indicators — global freight rates, Red Sea security incidents, and quarterly demolition counts — as signals that vessel arrivals and scrap supply may normalize
• Track regional LDT price spreads and yard HKC compliance costs to assess which recycling hubs will gain share and to identify margin pressure on yards and downstream steel producers
• Avoid direct exposure to small Alang‑dependent suppliers and retailers without diversified scrap sourcing; prefer steel firms and recyclers with secured alternative scrap supply or long‑term contracts
• If freight and geopolitical pressure ease, consider selective exposure to HKC‑compliant yards or integrated recyclers that can capture a rebound in higher‑quality scrap, while monitoring ESG execution and local policy developments