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Ship Recycling: Positive Steps Made for the Industry

The ship recycling industry is undergoing significant changes in various countries. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “this week saw an improved turnout (compared to last year) for the independent conference held in Amsterdam with main discussions surrounding the EU approved ship recycling facilities and regulations. The positive was that a European policy Officer was in attendance, unlike last year. The EU basically commented that a proposition will be submitted by 2025 for the changes to the EU Waste Regulation after due diligence from all the member states and other stake holders in the industry. The other two main talking points were the recent retraction of their EU approval for two Turkish yards (now only 6 approved recycling facilities in in Aliaga) and the potential of another two losing their licences. This would obviously create more pressure on those remaining EU approved yards should, as we have seen recently, an abundance of tonnage requiring EU approved recycling arrive to the market. Also, whilst there did feel a lesser attack on the Indian ship recycling by the NGO’s in attendance, it was clear that any EU approval towards Indian Ship recycling is still many years off, if ever. The constant topic to emanate from the conference was that more ship owners are now driven to recycle their ships in a minimum HKC compliant recycling yard by the pressure of banks, NGO’s and investors. With more tonnage set to be sold for recycling in the future years because of carbon emission regulations and other factors, the need for the EU to approve India is becoming more paramount”.

Source: Clarkson Platou Hellas

Clarkson Platou Hellas added that “further discussions also suggested that Bangladesh may accede to the HKC by the end of 2023, on the back of a strong commitment from their government, which would finally put the Hong Kong Convention in to force. Focusing on the budget announced in India this week, there has been no real change to affect sudden sentiment in the recycling industry. To kickstart the economy, a USD 549.14 billion outlay has been provided for the upcoming financial year (from April 2023). This continues the Governments roadmap to aide India to become a higher income economy by 2047. Steel demand looks set to increase ion the coming years as the Government paves the way for major investment in the railway system, building 50 new airports and other infrastructures. However, there were no additional duties on steel imports to counter any potential ‘dumping’ of steel from other countries, therefore the domestic recyclers would obviously be concerned about this scenario. Elsewhere, recyclers in both Bangladesh and Pakistan remain frustrated in their efforts to procure tonnage. Bangladesh are active in seeking the smaller LDT units (where L/C’s are easier to open) and will be very aggressive in their pricing for tonnage below 5,000 ldt whereas, Pakistan are practically redundant for the time being”, the shipbroker concluded.

In a separate weekly note, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “another solid showing from sub-continent markets has given encouragement to Ship Owners and Cash Buyers, to start testing potential prices with firm candidates. Indeed, several deals have been concluded off the back of these improved numbers, including one more Capesize bulker at firm levels basis an ‘as is’ Singapore delivery. Now that the Chinese New Year holidays have concluded, the expected bounce in freight markets has yet to materialize, so an increased number of dry bulk and container units (in particular) have come under serious negotiations for recycling. Even global currencies are starting to settle against the U.S. Dollar and steel plate prices have found a relatively steady place, as demand and a firm buying interest is increasing across all markets, even for Pakistan and Bangladesh, where it is often not feasible to do deals there due to the ongoing L/C restrictions”.

Source: GMS

GMS added that “talks on the much-needed IMF loans are still ongoing in each country, to bring back some essential liquidity and U.S. Dollars needed to establish fresh Letters of Credit so that domestic recyclers can start to import vessels / steel once again. In Bangladesh, there are certain / select end buyers who can open L/Cs with private financing (away from the government bank restrictions) or with Usance L/Cs, but this still provides only limited options to Cash Buyers / Owners with vessels to sell. Finally, Turkey too continues its stable streak with firming steel prices and a currency that’s found a new plateau to rest on, resulting in vessel prices firming an additional USD 10/MT this week. In other news, the Brazilian government owned warship Sao Paolo has tragically and unnecessarily been scuttled off the coast of Brazil with a plethora of hazardous materials on board, all while NGOs and outside observers (with no real knowledge of ship recycling) keep putting pressure on various countries (including Turkey) to deny entry of vessels for recycling”, the report concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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