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Demolition Market Has Caught the “Virus”

With the effects of the pandemic of the Coronavirus being felt around the world more and more by the day, the ships’ demolition market couldn’t be left unscathed. In its latest weekly report, shipbroker Clarkson Platou Hellas commented that “with the Coronavirus being closely monitored worldwide by Governments and now stretching to almost a pandemic level affecting global travel, Indian authorities this week held a ‘level A’ meeting internally with various Government departments and shipping agents to discuss the outbreak and the effect on crew arrivals at Alang anchorage. It was agreed that vessels arriving for recycling with crew nationalities from South Korea, Japan, Italy, Iran and China will not be allowed to enter India with immediate effect”.

The shipbroker added that ‘all ship recyclers have been requested to inform their cash buyers, agents and others within the ship recycling industry of this procedure. All other nationalities will be checked out with the health department at Alang anchorage, thereafter once cleared, the usual custom formalities for inward clearance can take place. This is an ever-changing situation and something that threatens shipping globally and is likely to have a negative effect on sentiment in the market as Buyers try to manoeuvre themselves through any new legislations imposed. This week, and despite the threat of cancellation due to the virus affecting attendees travel plans, the industry’s major players descended upon London for the annual Tradewinds Ship Recycling Forum”.

According to Clarkson Platou Hellas, “the week can only be seen as a success considering the amount of personnel that did travel and provided a good opportunity for strong discussions in relation to the EU Commission and the recently passed Ship Recycling 2019 Bill in India. These discussions are important in providing the industry with self-evaluation and ensuring that the continued developments and improvements at the recycling yards are highlighted to the rest of the shipping community.

Source: Clarksons

The brief conclusions, a reminder to ship owners globally, were that all EU flagged vessels have to be recycled at an EU approved yard, even if a vessel is sold to cash buyers away from European ports, and all vessels sold for recycling that have a final discharge port in EU waters should proceed directly to EU approved yards only. In relation to the European List, the attendees were informed that there are several pending applications from yards located outside of the EU (5 from Turkey, 20 from India, 4 from China and 1 from USA). The Assessment process are at different phases, but many of the facilities have already been inspected. However, until beaching can be considered, then unfortunately the Indian yards may still have some time to wait. Since the adoption of the Hong Kong Convention in 2009, some key Convention ‘Statement of Compliance’ milestones were mentioned, being 2012 (world’s first SoC in China), 2015 (South Asia’s first SoC in India, 2017 (added SoC in Turkey) and 2020 (Bangladesh added to the list). Whilst it will take some time still, the Government of Pakistan is also seriously now considering aligning its yards with HKC and the time frame they are aiming for is about 2 years. The conclusion left on everyone’s minds who attended, was that the recycling facilities have improved significantly over the last decade from both the environmental and labourer’s point of view. Indian yards are expected to be 100 pct HKC compliant by the end of this year and more yards in Bangladesh are upgrading their facilities in line with the new regulations. Certainly, the future is greener on all fronts, especially with Pakistan now also having their own internal discussions, although this destination is probably 2-3 years away from this breakthrough”, the shipbroker concluded.

Source: Clarksons

Meanwhile, in a separate weekly note, GMS, the world’s leading cash buyer said that “markets continue their seemingly uncontrolled downward spiral this week, with steel plate prices losing massive ground in India, and Bangladesh hardly offering any reasonable rates on available units. As the global Coronavirus fears justifiably deteriorate further, there have been fresh rulings in the subcontinent markets on permitting the import of vessels that have recently called China, South Korea, Japan, Italy and Iran within the last 14 days (or the vessel’s crew is of similar nationality on board). With the situation changing on a daily basis, these restrictions may be further amended or modified at short notice. So it is certainly a situation that needs to be monitored on an ongoing basis by Ship Owners and Cash Buyers alike, to ensure compliance and fulfillment of respective transactions. Billions (perhaps Trillions) have been knocked off global stock markets, amidst fears that we may be facing another global epidemic & recession, and recycling markets too have suffered as a result, despite a number of high priced and impressive sales taking place from seemingly bullish Cash Buyers who seem intent on ignoring the ongoing degradation of markets. Part of this bullishness could be attributed to the annual TradeWinds Ship Recycling Conference which was held in London this week, and despite various travel restrictions and fears of a global pandemic, the conference reportedly saw a decent turnout from industry players flying in from across the world. As freight markets continue to suffer, there is sure to be a steady flow of tonnage for recycling over the course of the year, but if prices maintain their steady descent (almost USD 50/LDT wiped off since the peaks of earlier in the year), many owners may (and certainly do seem to) choose to withdraw or hold vessels for the time being”, concluded.

Source: GMS

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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