Ships’ Demolition Market in Southeast Asia Undergoes Tectonic Changes During 2018

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Ships’ Demolition Market in Southeast Asia Undergoes Tectonic Changes During 2018

in Hellenic Shipping News 04/01/2019

Stricter environmental regulations have resulted in a significant change in the ships’ demolition market in India, with almost 80 yards now compliant with the Hong Kong Convention. In its latest report, the world’s leading cash buyer, GMS said that over 2018, “major developments have included the certification of over 76 yards in India that are now compliant with the Hong Kong Convention (HKC) for safe and environmentally sound recycling of ships, including a growing number that have obtained their SoC (Statement of Compliance) from various classification societies that include NK, Rina and IRS. Even a yard in Bangladesh has become the FIRST Rina certified HK SoC compliant yard in the country and the improvements / advances on this yard have been ongoing to the point that they are now aiming to achieve a class NK certification in 2019”.

GMS added that “Pakistan has of course had to undergo change and make improvements in their industry as well, with the closure on tankers following a series of unfortunate accidents onboard wet vessels in Gadani. Tankers now have to be fully gas free for hot works clean with all cargo residues, slops and sludges totally cleaned from all cargo and slop tanks – thereby falling in line with the more stringent operating standards currently in place in both India and Bangladesh for some time now. Advancements in the industry are ongoing and we at GMS look forward to further improvements and progress across the board going into 2019 and perhaps the EU approval of several subcontinent yards to further catapult the positive trajectory of the industry overall. Meanwhile, as the holiday week of Christmas and New Year has historically been a quiet year, this year was no exception with a no market sale week and bare minimum activity taking place, finally giving the industry an overall breather from the hectic pace and volatility witnessed of late”, GMS said.

More specifically, on a market basis, in Bangladesh, 2018 was the year of the tanker. GMS said that “it has been another busy year for the ship recycling industry in Bangladesh – taking in the largest vessels and highest volumes through much of 2018. Prices have reached the highest levels across the industry in Chittagong, but not everything was smooth sailing for this market as industry players also experienced some of the biggest delivery issues and renegotiations once the market turned, often spectacularly, leaving Ship Owners and Cash Buyers exposed. U.S. Dollar shortages leading to L/C issues remain the single biggest concern in Bangladesh, with fewer buyers able to get financing limits from their banks. Moreover, with elections just around the corner on the 30th of December, it will be interesting to see just how the Bangladeshi market wraps up 2018. Meanwhile, given that the announcement of the election results are just around the corner, local Recyclers maintained their wait-and-watch attitude in order to ensure no surprise changes affecting the recycling sector might be forthcoming. Notwithstanding, even though it was a quiet no market sale week, it was still a busy one locally, given the plethora of beachings and fresh arrivals at the waterfront this week”.

Meanwhile, in India, green was the norm. GMS said that “local progress on HK SoC certified yards (NK, Rina and IR class) in Alang this year has been astonishing. There are now 76 approved yards, with more set to follow in the new year. A Bangladeshi yard has also been approved this year and it really is now up to Pakistan and Bangladesh to take up the mantle and start improving their facilities accordingly, in order to build on the impressive work done in India to date. Alang ship recycling markets have endured a turbulent 2018, with historical depreciations on the Rupee and constantly fluctuating local steel plate prices that have persistently badgered local sentiments nearly every week in the last 2 quarters. However, this week finally provided some semblance of security to local Recyclers as both the Rupee and local steel plate prices improved as the week ended. The volume of tonnage being recycled in Alang also continues to impress and grow – particularly in the offshore sector (as local Buyers build on their recycling knowledge and know-how) in addition to a growing number of owners choosing green recycling as an option, marking Alang as a final destination. As such, we certainly anticipate it to be another busy year ahead in 2019”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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