Ship Recycling: Will There Be a Rise in EU-Approved Rise in Yard Capacity?

A potential increase in EU-approved ship recycling capacity in India’s Alang region, could be a significant shift in the market next year. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the ‘possible positive’ report circulating this week was the EU considering once again to put some selected yards in Alang (India) on to the approved EU list of recycling facilities. This would be a huge step to help capacity for EU approved facilities as currently, we are heavily relying on Turkey to absorb the larger tonnage that comes for sale requiring EU approval.

According to the shipbroker “the aim is that by 24th March, 2024 there will be some progression in talks, but many still believe this will take 1-2 years with efforts from the Indian Government and EU organisations to provide some breakthrough. Whether the NGOs accept this cleanly remains to be seen but, in the meantime, we are yet to see an official announcement by the EU. Another potential piece of good news derives from Pakistan. An announcement has been made confirming its accession to the Hong Kong Convention at the International Maritime Organization Assembly meeting this week and will shortly deposit the instrument of ratification with the regulator. The Pakistan government had agreed to sign up to the convention after the 15 November cabinet meeting. Before it enters into force, Pakistan’s shipbreaking yards will have to upgrade facilities and operating practices at the main shipbreaking site in Gadani to meet the standards of the Hong Kong Convention, a willingness they seemingly are prepared to do. Moving to the current market conditions, India has seen daily domestic falls in their steel markets and no-one from the waterfront really knows the reason why. They indicate the domestic lack of demand for steel but considering how the scrap market in the international arena is currently playing, and the lack of tonnage arriving for dismantling, it shouldn’t really be falling so the expectation, and hope, is it may be a short-term repositioning”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate report, GMS, said that “markets continue to struggle going into the final weeks of the year, and there has been very little activity or new sales to report as a result, with most end users abstaining from the buying and wishing to wait and watch developments before acquiring afresh. Indeed, contrary to many expectations, India has lost around 3,000 rupees (USD 35/LDT) from steel prices and there has been completely the opposite of any post Diwali bounce as all buyers turn to caution at the end of another highly volatile year in ship recycling. Pakistan was buoyed last week by the news that their country will adhere and sign up to the Hong Kong Convention – which will enter into force from 2025, so yards have time to upgrade and improve their facilities in line with HKC standards before then.

The EU will also revisit plans to approve select yards in India and add them to the EU list of approved ship recycling facilities – having previously visited but rejected plans to include them on any list several years ago. So there is much progress to report and much to look forward to going into 2024, but the thorny issue of available financing and LCs remains of chief concern in both Pakistan and Bangladesh. Constantly fluctuating and depreciating currencies need to settle before banks can start to approve fresh LCs in those locations. However, there is the general expectation that very few deals or new financing will be seen in Bangladesh until after the elections there in mid January, with the hope that a new government comes in to revitalize a struggling and stagnant economy”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide