Scrap ships crowd Bangladesh shore on demand for cheap steel

The 16-year-old needed five stitches after a sharp corner of a metal sheet sliced open his shin, forcing him off work for two days.

Faruq is one of 30,000 men who work around the clock on a 10-kilometre (six-mile) stretch of coastline in Sitakundu, dismantling old ships in possibly the world's biggest open-air workshop.

He says he knows the job is dangerous, but he needs the money for his family -- just as his country also desperately requires the steel that comes from the old ships.

For years, Alang in western India has been the world's largest ship dismantler, but earlier this year Sitakundu outpaced it, according to the Bangladesh Ship Breakers' Association (BSBA).

The association says demand for steel is booming in Bangladesh, due to six percent annual growth over the past four years, the biggest boom period in the country's history.

Sitakundu's 22 ship-breaking yards demolished one million tonnes of steel in the year ended June 30, according to the BSBA.

Once removed from the old ships, steel plates are melted down by Bangladesh's 200 small re-rolling mills and turned into steel rods.

Yard owner Alhaj Mohamed Yusuf says Sitakundu's frequent tides and low wages have made it the best place in the world to break ships.

"Due to frequent tides we can beach the ship just two hundred yards (metres) from the coast," he says.

"It saves us thousands of dollars for every ship we break, whereas in Alang and China they beach ships two or three kilometres out into the sea."

Bangladesh, with a population of 144 million people, also has some of the world's cheapest labour costs, he says.

Yusuf says the natural conditions, combined with growing demand for steel, have also attracted bigger ships to the yards.

"We're handling ships as big as 80,000 tonnes these days," he says.

To capitalise on the boom, he is planning to open a steel mill by the end of the year.

Unlike neighbouring India, Bangladesh has no iron ore and is dependent on imported steel -- either from scrap or more expensive billets, Yusuf says.

"It's a lifeline for Bangladesh," says Alihussein Akberali, managing director of Bangladesh Steel Rerolling Mills (BSRM), the country's largest steel producer.

"The rods made from scrap ships are inferior to those made by top steel producers, but they're at least 20 percent cheaper than high-grade steel and therefore are overwhelmingly used in the country's construction industry."

Like all commodities, prices of steel have experienced a sharp rise in recent years.

Akberali says two and a half years ago, he was paying almost a third of what he pays now for billets from India.

"Back then we were paying 430 dollars a tonne. About three months ago it was about 940 dollars a tonne but in May, India introduced a 15 percent export tax and the price is now around 1,150 to 1,200 dollars."

FR Khan is managing director of Asset Development, one of the biggest apartment construction businesses in the country.