30 July 2011

Scrap metal operators irate over Government's 90-day ban:

The operators of several local recycling companies have joined forces to implore the government to rethink its decision to ban scrap metal and copper exports.

On Wednesday, the government issued a statement indicating that, effective immediately, a 90–day ban has been placed on the export of scrap metal while a permanent ban has been placed on the export of copper.

According to the statement, the ban is in response to the widespread theft of copper and various metals, which has had an impact on major industries and utilities whose services have been disrupted.

The government is assessing the scrap metal industry and will engage with various stakeholders and legitimate businesses with a view to better regulating and monitoring the industry, the statement noted.

The Bahamas government's decision follows a similar ban Jamaica imposed recently.

During a press conference yesterday, organized by community activist Troy Garvey, the businessowners talked about how this measure is affecting their operations.

Trevas Hall, the proprietor of Presto Recycling, said he is willing to facilitate the implementation of whatever measures the government proposes to regulate and monitor the industry, and does not think it is necessary to shut it down.

"The percentage of people that actually benefit from scrap outweighs the negatives," he said.

His company employs 30 people, he said, but without the revenue generated by scrap metal exports, he would be hard pressed to keep them all on.

"Without any consultations this ban was levied on us now. What am I supposed to do with my employees for three months when this is what we do on a daily basis to make our living. And then besides our direct employees we have hundreds of people – no one is going and stealing people's stuff to bring in – I'm talking about people going into the bushes and cleaning up this island to bring in that scrap and they're getting paid for it, an initiative that the government, nor the (Grand Bahama) Port Authority or no one else seems to have put in place, but we the people, the commoners managed to get in place. And the government did not regulate it. They had a mandate, their mandate was to regulate it," he said.

"I'm not here really to agitate with the government, it isn't a political issue to me, I'm just pleading with the government, because of so many people that I know recycling affects and how many people are actually depending on recycling, to revisit that decision."

Hall suggested that the length of time for the ban be shortened to 30 days instead of 90.

"We could try and cope with that, but anything beyond that is like a death sentence for our business. They might as well tell us close down," he said.

Hall said he has made, especially in recent times, a large investment in his business. He has planned to move to a larger location soon, and expand into the recycling of other materials, such as plastic. However, he is now waiting to see what will be the outcome of the government's assessment of the industry.

"A government is supposed to assist the people and see that we make it...Be fair to us, regulate recycling but please, don't shut us down," he said.

Operator of the Grand Bahama International Trading Company, Dennis Deleveaux, said he currently has six containers full of scrap metal at the harbour waiting to be shipped and two more in his yard.

Following the government's announcement, he said he was notified by the shipping company he uses that he must remove the scrap metal from the containers.

That would require labour and heavy machinery, he noted, and questioned who was going to bear the cost.

"Do we have to pay and go to unload the containers? To unload the containers, it costs us way more than the profit we're actually making off the containers, so we're actually going backwards. Then what about the money that we already invested in that material that's sitting there in the yard ready to go? What about our employees that we can't pay that already worked for us? Who's going to pay them if we can't pay them because all of our money is tied up in our containers? What about the contracts that we signed with our buyers? We have obligations, we are bound to a contract. When we violate this contract we suffer stiff penalties, who will take the cost on that? Will the government pay the cost?"

Deleveaux said he believes the government should have given previous notice to operators that they were going to implement the ban, so as to allow them time to export their stock.

"At least they should give us some type of timetable where we would have a grace period to send our containers out and retrieve our funds so we could pay our employees and not take any losses. But it was immediately, no one contacted us, they gave us no warning," he said.

"So we're begging the government to give us a chance to get our containers out, make our money. And if we need to have police presence at our location, so be it, if we need to have photo ID, so be it, whatever it takes to put us back in business, we are ready to work with the government. But right now our backs are against the wall and we're at a standstill and we feel that we are being wrongly treated."

Deleveaux said the scrap metal trade is the last hope for Grand Bahamians who are seeking to make an honest living.

"This is the only thing that we have to supply money into the community... It's not just affecting the scrap metal dealers, it's affecting the entire island and it's hundreds of people that actually go into the bush and do an honest living by scrapping, digging with their bare hands. We have the Sea Grape dump, the Jones Town dump and the Pinedale dump. People go in with bare hands and pickaxes, to bring us scrap metal to sell to put food on their table and without warning the government shut the door on them. So what are we to do as Bahamians? Grand Bahama is dead, they might as well give us a noose and let us hang ourselves," he said.

Another businessowner, Theodore Russell of Five Star Recycling, spoke out about his predicament.

"I currently have four containers that are supposed to be shipped tonight into Fort Lauderdale. The containers were cleared to export on the 25th, this went into effect on the 27th, my containers are currently sitting on the habour and cannot even be shipped tonight to West Palm Beach to the buyer, who is waiting on them. I have close to about $30,000 or $40,000 worth of stuff on the ground here in Grand Bahama, not including what's at the harbour, that I already paid for. What am I to do with them, leave them there for 90 days? It's not fair," he said.

Russell said families around the island are depending on the money generated by scrap metal recycling to make ends meet, and pointed to the high unemployment rate on the island as a contributor to the industry's popularity.

"The unemployment rate in Grand Bahama is skyrocketing, this here is helping Grand Bahama in ways far beyond anybody can imagine, and here it is the government is just coming out and not even sending a letter to the business people. I run a legitimate business, I'm licensed. It's no more than fair for the Minister of Finance, who is the Prime Minister, to come forth with a letter saying, 'This is our intention, we intend to regulate the recycling industry, and this is what we're going to do. You would have enough time to export what you have in your possession and then within 90 days we're going to regulate this whereas it's going to be monitored.' That's no problem. They need to be more considerate and be lenient to the business people," he said.

Russell stressed that his company does not condone the theft of any materials.

Meanwhile, George Pinder of Caribbean Recycling, pointed to the environmental benefits the industry brings, noting that the collection of scrap materials keeps the island clean.

"What we're doing is cleaning up the entire country, so when tourists come they will see that The Bahamas is a clean place. They wouldn't see any garbage in the bush, especially metals because we take up even cans, whatever it is, to recycle it."

The recycling industry is not about easy money as some believe, he said.

"The work isn't easy, we have to work very hard... And it costs a lot to just ship it out, and we don't really make a big profit unless we ship a lot."

Presto Recycling employee Winston Saunders made a special appeal to the local Members of Parliament to speak up for their constituents.

"Please stand up for the people of Grand Bahama, shine for us for once. It's about that time that they stand up strong for us. This island is hurting and.. We've been suffering for a long time... We need help."

Source: The Freeport News. By K. Nancoo–Russell (krystal@nasguard.com)
29 July 2011.

WeberSeas Weekly Demolition Market Report Week 30 of 2011:

Demolition Statistics -

Type of Ship
This Date
2011
This Date
2010
2010
Total
2009
Total
ULCC/VLCC
6
12
14
10
SUEZMAX
0
4
10
5
AFRAMAX
8
6
14
12
PANAMAX Tanker
2
7
10
8





CAPE/COMBO
(100,000 DWT+)
48
8
15
5
PANAMAX/KAMSARMAX
Bulker
35
2
6
21

Average price/LDT -

Location
Tankers
Bulk Carriers
China
$465
$455
India
$535
$530
Bangladesh
$540
$530
Pakistan
$510
$480


Source: Hellenic Shipping News. 29 July 2011

Placing Our Dry-Bulk Shipping Universe Under Review:

We have decided to place our fair value estimates for our dry-bulk shipping coverage universe under review as a result of weaker-than-expected freight rates throughout the second quarter and our expectations that market fundamentals will remain soft for an extended period. We think cash flow generation will eventually come under pressure for each of these companies due to the various levels of exposure to the weakened dry-bulk market. As such, we expect material fair value changes to Excel Maritime EXM, Genco GNK, and Eagle Bulk EGLE due to their significant fleet exposure to the spot market. Although we still believe Diana Shipping DSX and Navios NM are well-positioned for prolonged weakness in shipping, we expect these two will also suffer, as EBITDA is eroded through upcoming contract expirations with charterers. Our long-term expectations generally remain positive, but we caution these firms' near-term profitability headwinds may pose increased risks to their ability to service their obligation schedules.

On Wednesday, Genco reported 2nd quarter results that came in slightly below our expectations, and we project downward revisions to our long-term freight rate assumptions for all asset classes, including Capesizes and Panamaxes, as we expect market fundamentals to remain weak for an extended period. For the three-month period ended June 30, 2011, the company posted voyage revenues of $88.6 million (excluding Baltic Trading), down 9.9% compared to the year prior, and consolidated operating margins of 32%, down from 52% in the second quarter of 2010. Net income attributable to Genco declined to $10.1 million, down 73% from the same period prior, resulting in diluted EPS of $0.29. Although consolidated revenue ($98.5 million) declined year-over-year and operating costs increased sequentially from managing a larger fleet, we're encouraged to see the firm remain cash flow positive and bolster its cash balance to $292.1 million (excluding Baltic Trading) over the second quarter. Additionally, the company took delivery of 2 new vessels over the period, leaving one final newbuild scheduled for delivery with minimal capex requirements.

During the conference call, we like the fact that management reiterated its focus on deleveraging the firm for the remainder of 2011. With the company's upcoming debt amortization schedule at about $19 million per quarter until June 2012, we think the firm's increased cash position calms any concern about potential liquidity constraints over the next several periods. Management also provided their outlook on industry fundamentals and sees a potential pickup in Japanese reconstruction to be a short-term catalyst to demand. Chinese steel production increased 9.2% year over year through the first half of 2011, and the China Iron & Steel Association raised its 2011 crude steel output to 700 million tons from their previous forecast of 660. We think China continues to be the key driver to iron ore and coal activity over the long run, with steady increases to steaming coal imports used for power generation in the emerging economy.

With regards to supply, we think slippages will continue to remain elevated (about 40% in the quarter) as ship owners face financing issues to take delivery of previously ordered vessels.

We think scrapping activity in the second half of 2011 will resemble that of the first half, due to low charter rates and high scrap steel prices extending into 2012.

Management noted that 13.5 million deadweight tons have been scrapped so far in 2011, compared to 5.7 million in all of 2010, and estimates that up to 100 Capesize vessels will be scrapped by the end of the year.

Still, we think overcapacity will continue to weigh heavily on freight rates for some time, and Genco expects it will take 12-18 months for a material recovery.

SourceToronto Star. By Paul Choi. 27 July 2011

Update 1 - Panamax ship scrapping to hit record in 2011:

  • Capesize ship scrapping gathers pace
  • Dry bulk market struggles with ship glut
LONDON, July 27 (Reuters) - Scrapping of panamax dry bulk vessels is on course to hit an all-time high this year as the sector faces growing pressure from a record number of new ships entering the fleet, ship broker SSY said on Wednesday.

The outlook for dry bulk rates has been grim because ship supply has outpaced demand to ship commodities.

"So far this year we have seen 46 panamax vessels scrapped, which puts panamaxes easily on course for a record year overtaking the 53 which were scrapped in 2009," said Derek Langston, a senior director at SSY Consultancy and Research.

"These are vessels that we have seen arrive at the breakers and exiting the fleet. These do not include recent sales that we have been aware of in the last month. So that number is clearly set to grow," he told Reuters.

SSY, one of the world's biggest ship brokers, said 7 panamaxes were scrapped in 2010. Panamaxes, which range between 60,000 to 99,000 deadweight tonnes (dwt), usually transport cargoes of coal or grains.

"As well as having record demolition activity, we also have record levels of new buildings and the panamax newbuildings are poised to overtake the 186 total we saw in the whole of 2010," said Langston.

SSY said 152 panamaxes had been delivered so far this year.

Average panamax earnings have hovered below the $13,000 a day level in recent days and reached $12,232 a day on Wednesday, down $54 a day from Tuesday.

Larger capesize vessels, over 100,000 dwt which typically haul cargoes such as iron ore and coal, have also seen record demolitions this year.

Langston said 49 capesizes had been scrapped this year, with 33 in the second quarter alone.

"We have seen more done in one three-month period than any whole year previously," he said referring to the pace of cape scrapping.

Nevertheless, SSY said 140 capesizes had entered the fleet since the start of the year, with a further 10 ships converted from tankers into capes. That compared with 214 capes delivered last year and a further 17 conversions.

There have been no panamax conversions so far this year, although two tankers were converted in 2010, SSY said.

While U.S. coal exports have been running at the highest levels since the early 1990s and there had been strong growth of minor bulk imports into China, the number of new dry bulkers hitting the water was weighing on the sector, Langston said.

Net fleet growth was forecast to be of a "similar magnitude" to last year, which was around 76.3 million dwt, SSY said.

"Understandably such rapid fleet growth means that several positive developments in seaborne dry bulk trade growth have not prevented a low freight environment," Langston said.

The Baltic Exchange's main index has more than halved in the past six months, nearing levels last seen during the economic turmoil in 2008. It reached 1,296 points on Wednesday.      

(Editing by Anthony Barker)

Source: Reuters. By Jonathan Saul. 27 July 2011

29 July 2011

Inventory Of Hazardous Materials (IHM):

An appendix to the Convention will provide a list of hazardous materials the installation or use of which is prohibited or restricted in shipyards, ship repair yards, and ships of Parties to the Convention. Ships will be required to have an initial survey to verify the inventory of hazardous materials, additional surveys during the life of the ship, and a final survey prior to recycling.
International Maritime Organization.

What is an Inventory of Hazardous Materials?

The inventory of hazardous materials was introduced in the 2009 Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships. When the convention becomes compulsory in coming years all ships weighing over 500GT will be required to carry the inventory.

The inventory of hazardous materials has been introduced to ensure the safety of all those who could potentially be exposed to hazardous  materials. This could include workers in the ship yards, on the ships and at the recycling yards. Hazards that are commonly found on vessels include asbestos, PCBs, TBTs, ODS and microbiological contaminants.

Some hazardous materials found on board ship:

Asbestos
a set of six naturally occurring minerals which have been used commercially for hundreds of years due to their desirable physical properties. Their all have in common their long, thin fibrous crystals. The inhalation of asbestos fibres can cause serious illnesses, including malignant lung cancer, mesothelioma and asbestosis.Since January 1, 2005, the European Union has banned all use of asbestos and extraction, manufacture and processing of asbestos products. Lucion is UKAS (United Kingdom Accreditation Service) accredited to survey for asbestos containing materials and is the Royal Navy’s retained Asbestos Management Consultancy.
PCBs
PolyChlorinated Biphenyls (PCBs) have been used since 1929 in a variety of applications, including as heat transfer fluids in large transformers and as dielectric fluids in capacitors. Though their use has now ceased, they are still present in many older electrical installations.
TBTs
TriButylTin are the main active ingredients in certain biocides used to control a broad spectrum of organisms, and these compounds are being considered for inclusion in the Rotterdam Convention. Uses include wood preservation, antifouling pesticide in marine paints.
ODS
Ozone-Depleting Substances. The main source of these halogen atoms in the stratosphere is photodissociation of chlorofluorocarbon (CFC) compounds, commonly called freons, and of bromofluorocarbon compounds known as halons.
Microbiological contaminants
contaminants that build up in stagnant water are also a major source of hazard in ships that are to be recycled. Hazards such as legionella and algae are particularly harmful to employees and the environment.

Due to the amount and variety of hazardous materials that are commonly found in vessels, new legislation is soon to come into place to ensure hazardous materials are contained and managed correctly. The Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 proposes that all commercial vessels will be required to possess an ‘inventory of hazardous materials’ (also known as a green passport) which will stay with the vessel throughout its lifespan and contain a record of all hazardous materials such as those listed above and their location and status.

Source: Lucion Marine.

Chittagong speculation continues as the battle rages on between scrap steel value and health, safety and environmental concerns:

The High Court in Bangladesh has issued an extension to a previous order granting vessels access into Chittagong to be demolished on the Bangladeshi beaches. This has been issued in order to allow the Bangladeshi government more time to produce an official order on the regulations surrounding the health, safety and environmental impacts of shipbreaking.

In the mean time, Chittagong is back in business, or so it would seem. The announcement caused a reaction with vessel purchases and scrap value at all the major shipbreaking sites reacted accordingly.

Two vessels were purchased for demolition in Chittagong according to Lloyds List, with chemical tanker Dolphina reaching $530 per ldt. It was not reported whether this vessel carried an inventory of hazardous materials.

With the threat of valuable end-of-life vessels heading to Chittagong, India’s Alang Beach saw 5 new vessels bought last week, and reportedly favourable offers to ensure they remain a market leader.

Prices also rose in China, even though these still remain the lowest compared to Bangladesh, India and Pakistan and has seen purchases mainly from local owners. None the less China is still competing in the ship demolition market, and is getting increasing amounts of press for efforts towards green ship recycling, such as Dalian’s announcement to build the world’s largest green ship recycling yard in China.

Thus competition in the market seems to be a positive progression for ship recycling, hopefully ensuring health, safety and environmental concerns are becoming a necessity for all the leading breaking yards, especially with hints that Europe may be favouring the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 over the Basel Convention due to conveniences over transport of waste and hazardous materials. 

To this end, it has now been reported on Lloyds List that the Bangladesh Supreme Court retracted the extension after hearing an appeal from the Bangladeshi Environmental Lawyers Association (BELA), an association that has been extremely influential in the efforts to improve the standards of ship recycling in Bangladesh whilst maintaining the industry for the much needed employment and scrap steel the industry provides. The order will now be reviewed on 28th July.

Source: Lucion Marine. 26 July 2011

Panamax Scrapping on the Rise:


Following capsize bulk carriers, old panamax bulker scraping is also on the rise and expected to record new high.

At the beginning of 2011, panamax bulk carrier kept relatively stable market conditions compared with capsizes. However, recently the sector fell into market downturn and scrapping volume already hit 50 vessels till now, almost the same with the highest of 53 set of 2009.

The scrapping level till now is expected to alleviate the current overcapacity brought by excessive new orders.

It is predicted that over 100 panamax bulker would be scrapped this year, an all-time new high.

Source: E Ship Trading. 28 July 2011

Submarine towed through Hamilton en route to wreckers:

Decommissioned Oberon class submarines OLYMPUS (foreground) and OJIBWA at Dartmouth, Nova Scotia, 25 November 2010
After training generations of Canadian submariners, a proud warrior is on her way to a new life as car parts or razor blades.

HMCS Olympus, one of Canada’s four retired submarines, was floated by special barge into Hamilton Harbour Thursday morning on her way to a “shipbreaking” yard on Lake Erie to be turned into scrap metal.

The HMCS Olympus, a 2,500-ton de-commissioned Canadian submarine is docked in Hamilton Harbour at Heddle Marine Service Inc.
The sub’s journey from Halifax to Hamilton and on to Port Maitland was accomplished by two Hamilton companies, McKeil Marine and Heddle Marine Services Inc. Heddle provided a floating dry dock on which the sub was loaded while McKeil provided the tugboats that pushed and pulled the warship up the St. Lawrence River and across Lake Ontario.

Moving the sub called for some careful engineering work to ensure the 2,500-ton cargo remained stable during the 10-day voyage, explained Heddle Marine president Rick Heddle.

“We used enough cables and ridges and supports that it could never topple over,” he said. “It was a case of loading it, securing it and then watching our weather.”

Olympus is the first of three subs the companies are to move. Her sister ships, Okanagan and Ojibwa, will make the same voyage — Okanagan heading for the scrap yard and Ojibwa possibly to a new life as a museum in Port Burwell on Lake Erie. Onondaga became a museum in Quebec in 2008.

Every stage of the 1,200-nautical mile voyage was carefully planned to ensure the vessel and cargo were never too far from a safe port — a refuge they’d need whenever waves on the lake got higher than two metres or the wind blew faster than 25 knots.

Submarine's final voyage. Training sub in the Oberon class is moored up in Halifax.
The sub was moved in a process called dry towing — a Heddle-designed dry dock was submerged under the Olympus, then it lifted the boat out of the water. The alternative, a wet tow in which a tug simply hooks onto the retired vessels and pulls it along was rejected by the St. Lawrence Seaway.

“After sitting idle for almost 10 years these boats are in pretty rough shape,” Heddle said. “If one was to sink in a lock that could plug up the whole seaway system.”

Paulo Pessoa, McKeil’s vice-president for business development, said moving the submarines is only the latest in a number of challenges undertaken by the Hamilton company. In past efforts, it has been hired to recover a Second World War-era B-17 bomber that crashed in Greenland and to salvage the remains of a British aircraft that crashed into Lake Ontario during the CNE air show.

Pessoa said while foreign companies could have been hired to move and cut up the boats at lower costs, hiring Canadian firms ensured the work is done with the smallest environmental footprint.

“The (defence department) has a lot at stake here,” he said. “If they hired a company to recycle the submarine and then have it sink in the river, that would be a PR disaster.


“Paying the extra cost associated with doing it in the safest way possible is a no-brainer,” he added. “For us, redundancy was the name of the game.”

The actual destruction of the subs will handled by Marine Recovery Corp. of Port Colborne.

Olympus, Ojibwa, Okanagan and Onondaga were diesel-electric Oberon class submarines built in Britain in the 1960s. They served Canada’s navy for 30 years — Ojibwa, Okanagan and Onondaga doing Cold War-era surveillance patrols off the east coast while Olympus remained tethered as a training vessel. At the time they were built, the boats were the latest technology, according to the Canadian Naval Centennial Internet site. Between 1979 and 1981, they were upgraded, but by the late 1990s “Though respectable enough craft in their prime, the ‘O’ boats had long since reached the end of their useful lives and by July 1999, the three had been paid off and replaced by the Victoria class.”

Submarine's final voyage. Brian Coleman photographed the HMCS Olympus about a mile offshore from Burlington as it was being towed into Hamilton Harbour.
The subs were “paid off” between 1998 and 2000.

When Okanagan is towed into Hamilton, it will actually be her second visit to the city. She was here in November 1990 as part of a good will tour of the Great Lakes — the first such voyage by a Canadian submarine.

Source: TheSpec.Com. By Steve Arnold (sarnold@thespec.com). 29 July 2011

GDSA Weekly Demolition Market Analysis for Week 30 of 2011:

Week Ending: 29th July 2011 (Week 30, Report No: 30/11)


Demolition Market:

In the demolition market, the situation for the reopening of the Bangladesh remains pending, while in India prices are going high, surpassing the barrier of $500/ldt, due to mainly firm steel prices Despite the announcement that the Bangladesh market has been granted an extension till October, the Bangladesh Environmental Lawyers Association (BELA) made an appeal to the extension and the decision was reviewed again by the Supreme Court with the market remaining shutdown.

Pakistan and China have been left behind with expectations for a hard competition between India and Bangladesh. The news from the Bangladesh market buoyed the sentiment in India with some units fetching levels well in excess of $500/ldt including a large amount of bunkers remaining on board.

Pakistan won one bulker in its scrap yards with China witnessing more activity in its scrap yards at levels of excess $450/ldt. 

The week ended with 12 vessels reported to have been headed to the scrap yards of total deadweight 557,302 tons.

In terms of the reported number of transactions, the demolition activity has been marked with a 50% week-on-week decline and regarding the total deadweight sent for scrap there has been a 21% drop.

Bulk carriers continue to dominate the demolition scene grasping 67% of this week’s total demolition activity.

In terms of scrap rates, the highest scrap rate has been achieved this week in the bulk carrier sector by India for a panamax unit of 64,780dwt “HANDY V” OF 11,349 LDT at $530/ldt incl 700 tons of IFO remaining on board.

India has attracted 50% of the total demolition activity offering $515/ldt for dry/general cargo and $540/ldt for wet cargo.

At a similar week in 2010, demolition activity was standing at similar currently levels, in terms of the reported number of transactions, 12 vessels had been reported for scrap of total deadweight 694 mil tons with only two bulk carriers scrapped and India offering the $400/ldt for dry and $440/ldt for wet cargo.




Source: www.goldendestiny.gr. 29 July 2011