Chattogram’s shipbreakers and the cost of going green

The shipbreaking yards of Chattogram face an investment question with no good answer. Upgrading to meet the global convention’s standards costs serious money, and the steel prices that pay for ship scrap do not currently reward the difference. Bangladesh’s yards are caught between the rules arriving from London and the market that actually buys their output, and the honest analysis is that the market is winning.

Chattogram, on the Bay of Bengal coast, has been one of the world’s largest shipbreaking sites for decades, and its yards feed the country’s steel re-rolling sector directly: plate and structural sections from broken ships become the reinforcement bar and sections that construction in Bangladesh runs on. The industry is not marginal to the economy; it is part of the construction supply chain, and the steel it releases has been a cheap domestic input that the country has built on. Any serious change to the yards’ cost structure is a change to housing and infrastructure costs, which is why the domestic politics around it are not straightforward.

The investment math is the problem. A yard that wants to meet the Hong Kong Convention’s standards, with impermeable floors, controlled drainage, hazardous-material handling and proper cranage, is spending money on infrastructure whose return arrives only if compliant tonnage prefers that yard. The convention-compliant ships are still a minority of the demolition fleet, and a yard that upgrades while its neighbours do not pays a premium and watches compliant ships divide among the upgraded facilities while non-compliant tonnage flows around all of them. The first movers are running a bet that the market becomes selective faster than the industry has ever been.

Why now? The convention’s entry into force in June 2025 created a two-tier market, and the Chattogram yards that had invested earlier, with some receiving statements of compliance and statements of authorisation under the national framework, are now competing for the compliant segment. The volume of compliant tonnage is still growing, and the yard-level decisions being made now will determine which countries capture it. The certification counts published from the region deserve a note of caution, as numbers vary by source and by what counts as certification, but the direction is clear enough: the largest yards invested, and the small ones mostly did not.

What should happen is international support for the transition rather than criticism of its pace, and the honest version of that support is finance, not advice. The yards that upgrade are delivering a global environmental good for which their customers, the shipowners, are not paying. A levy or a premium on convention-compliant dismantling would change the investment math immediately, and until something like it exists, the transition rests on the goodwill of yards with thin margins and no leverage over their suppliers.

For traders, the practical consequence is in the steel supply. Chattogram’s output feeds domestic re-rolling rather than international trade, so the effect is on Bangladeshi construction costs and on the scrap the country imports to fill the gap. The NGO Shipbreaking Platform’s data tracks volumes and yard compliance, and the International Maritime Organization holds the convention framework. scrap.trade handles the documented trade in the metals the industry releases into supply chains.

The domestic supply chain point deserves its own paragraph, because it is the reason the industry’s politics are the way they are. The re-rolling sector buys ship plate at prices set by the international demolition market, and the country’s construction boom has run partly on that input being cheaper than alternatives. A cost increase at the yards is therefore a housing and infrastructure cost increase in Dhaka, and the government’s interest in cheap demolition output is not a corruption story but a public finance story. Anyone proposing conditions at Chattogram has to carry that arithmetic, and the proposals that ignore it are the ones that arrive as newspaper articles and leave as nothing else.

The employment question is the second half of the same arithmetic. The industry’s workforce counts in the tens of thousands at full capacity, in a region where the alternative employment is thinner than the industry, and the safety record does not change that calculation for the people working there. The labour is dangerous and it is preferred to the alternative, which is the uncomfortable fact that both the industry’s critics and its defenders avoid. The policy that improves conditions without removing the jobs is the only one with a constituency inside the country, and the international pressure that ignores the constituency is the pressure that gets ignored. The financing gap is where the analysis should sit, because the amounts in question are not large by development finance standards and the instruments to deploy them are missing. A row of yards needing impermeable floors and drainage is a straightforward infrastructure project, and the reason it is unbuilt is not engineering complexity but the absence of anyone whose budget it belongs to. Multilateral finance institutions have the capability and the mandates; what they have lacked is a counterparty, and the government is the only candidate. The yards that invested early did so with their own balance sheets or with national guarantees, and that is a financing history worth studying before the next round of international criticism is written.

The Chattogram question is not whether the yards can be made cleaner; they can be, by anyone with enough money and patience. It is who pays, and the current answer is the yard, which is the party with the least ability to do so and the least reason to.