The big news of the week concerned Monday’s announcement of the government subsidies due on any Chinese flagged tonnage sold into Chinese recycling yards this year.
Under the new scheme, State owners with Chinese flagged vessels will be due a premium equivalent to USD 124/GRT on any vessels sold to locally approved yards (from this year) until 2015. A USD 124/GRT discount will also be available should those same owners, who have scrapped, choose to invest in a newbuilding units from a Chinese yard.
This stimulus package has seen some of the major Chinese players scrap vessels well into double digits this year, without even considering the sub-continent option. This has perhaps contributed to the lower overall pricing of Chinese yards, since demand has decreased owing to the number of well-priced vessels available from local owners.
A number of scrap yards have already been approved for the scheme (the deals will be done direct between owners and yard without the involvement of cash buyers or brokers) along with a number of smaller local currency led yards based in the Fujian area.
Source: steel guru. 17 December 2013