27 December 2010

GMS weekly report on Bangladesh ship breaking industry, Week 50 & 51, 2010

WEEK 51:

The news emanating from Chittagong this week left many involved in the industry holding their heads in despair yet again. Environmental group BELA once again managed to obtain a high court order banning the import of any new vessel for recycling.

On December 15th, the Bangladeshi High Court passed an official order to local authorities to cease the issuance of fresh NOCs for future/incoming vessels. Additionally, the High Court also instructed the government to form an expert committee who would determine whether or not, a vessel arriving locally for scrap is free from hazardous materials (which in turn would determine whether the vessel would be permitted to beach locally).

Subsequent to the news, nearly all SNP activities in Bangladesh are once again on hold, with this news coming at a time when many had seen the recent activity as a few positive steps forward for the industry. Where exactly that leaves ship recycling in the country especially in the short term is anybody's guess, and there is sure to be the inevitable round of appeals, complaints and paperwork lodged in the ensuing weeks.

Whether those few vessels that had previously obtained NOCs will be allowed to beach is another question that remains unresolved, although it is very much hoped that local formalities and deliveries can proceed as planned. With Bangladesh frozen out of the game then for another indefinite period of time, it will be up to all other competing markets to fire up their engines to invest in the expected heavy influx of vessels to come.

WEEK 50:

The now familiar process of appeals and accusations have been doing the rounds in Bangladesh this week, with permission for those 14 vessels recently beached not yet in place. It is hoped by the concerned recyclers that the permission could be in place within the next few weeks, but with the situation as it has been for the past 6 months in Chittagong, it is dangerous to put a timescale on anything.

Since the first round of beachings, several more large vessels have actually beached including an LPG and a Capesize. However, these have been done at levels resembling the Indian sub continent prices presently, not the stratospheric numbers many are expecting (perhaps lightly so given the absence of the industry from the scene for the past half a year and the deserted state of the yards).

Nevertheless, with 8 more recyclers still hoping to obtain permission, it is likely to be a gradual process and one that may not see a sharp spike in prices but a slow 'trickle' to relevant yards at far more muted levels, perhaps just the 're-introduction' many local buyers would have hoped for in order to manage expectations somewhat.

Source: SteelGuru. Thursday, 16 Dec 2010 and Tuesday, 21 Dec 2010. (Sourced from GMS Weekly)

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