27 September 2016

SteelMint prepares for raw materials conference:

Bangladesh event will focus on raw material issues in the Indian subcontinent’s steel industry.

The India-based Steel Mint Group is preparing for its second Coal, Steel and Raw Material Conference: Emerging Bangladesh, which will take place 14-15 November 2016 in Dhaka, Bangladesh, at the Hotel Radisson Blue.

Namrata Diwaker, group brand manager with the SteelMint Group, says the first edition of the Coal, Steel and Raw Material Conference: Emerging Bangladesh drew some 170 participants from more than 110 different companies.

Topics scheduled to be discussed at the November 2016 event include the growing ship recycling sector in Bangladesh.

“Bangladesh is among the top nations where ship dismantling happens over a large scale,” says Diwaker.

“The nation dismantled around 270 ships in 2012, 210 ships in 2013, 223 ships in 2014 and around 200 ships in 2015,” she adds.

Diwaker says that activity yielded some 7.86 million tonnes of ferrous scrap in 2014 and about 4.73 million tonnes in 2015.

According to SteelMint, “Bangladesh continues to be one of Asia’s most emerging markets in the steel, cement and power sectors, with a growing need for technologies and raw materials such as coal, billet, scrap, hot briquetted iron, pig iron and hot-rolled coil steel.”

Adds the firm, “The two-day international ConfEx (conference cum exhibition) will be attended by major raw material and technology suppliers from all over the world with an objective to network with steel, cement and power producers and traders in Bangladesh.”

More information on registering for the November event in Bangladesh can be found here.

Source: recyclingtoday global. 27 November 2016

25 September 2016

Legambiente joins Platform's campaign for sustainable ship recycling

Brussels, 19 September 2016 - The NGO Shipbreaking Platform welcomes onboard Legambiente, its first-ever Italian member organization.

banner-legambiente3 
Legambiente is a non-profit association created in 1980 for the safeguard of the environment and for the promotion of sustainable lifestyles, production systems and use of resources. It is the most widespread environmental organization in Italy with over 115.000 members and over 2 million people involved in volunteer activities and campaigns. Legambiente's strength is based on the work of 1.500 local groups and coordinated through 20 regional committees and a national headquarter in Rome.

“We strongly believe that our commitment to protect the marine environment perfectly fits with the aim of the NGO Shipbreaking Platform with whom we share the same objectives”, said Sebastiano Venneri, Marine Conservation Officer of Legambiente. “Ship owners have a particular responsibility to make sure that their ships are dismantled in a sustainable way. Nevertheless, Italian-owned commercial vessels keep being broken on South Asian beaches, polluting the environment and putting at risk workers’ safety. It is our goal to stop the shameful practice of beaching and to advocate for truly safe and environmentally sound ship recycling, involving citizens and the industry sector in Italy”.

The demolition of ships is a hazardous endeavor that requires adequate measures to protect the maritime environment, to ensure environmentally safe and sound management of hazardous waste, and to guarantee high health and safety standards for workers. Yet only a fraction of decommissioned ships is handled in a safe and sustainable manner. More than 70% of the end-of-life ships sold for dismantling today end up in South Asia, the region that has served as the main destination for obsolete tonnage in the last decades. The end-of-life vessels are run up on the tidal shores of India, Bangladesh and Pakistan, where they are dismantled mainly manually by a migrant work force. The beaching method is at the source of coastal pollution and dangerous working conditions, while modern ship recycling facilities remain unused for the sole purpose of maximizing profits for the shipping industry. In the last seven years, around 90 Italian-owned ships have been dismantled on South Asian beaches. The export of end-of-life vessels from Europe to developing countries is illegal under European environmental law.

“The Platform is excited to join hands with Legambiente and to raise concerns related to unsustainable shipbreaking practices in Italy together. Dirty and dangerous shipbreaking has not yet received the necessary attention in Italy, and Italian ship owners are yet to pledge and implement clean and safe ship recycling policies", said Patrizia Heidegger, Executive Director of the NGO Shipbreaking Platform.

Source: NGO shipbreaking platform. 19 September 2016

24 September 2016

Nitin Gadkari wants Alang shipyard type model for recycling automobiles:

Can the Alang shipyard model of dismantling ships from around the world, and becoming a global centre for ship-breaking and ship-recycling, be replicated for recycling automobiles.

A vehicle-scrapping plan is being proposed by the government for 15-year-old heavy and medium commercial vehicles, as it would not only boost growth of the Indian automotive industry with renewed demand, but would also help the generation of raw materials for the industry, Gadkari said.  (PTI)
A vehicle-scrapping plan is being proposed by the government for 15-year-old heavy and medium commercial vehicles, as it would not only boost growth of the Indian automotive industry with renewed demand, but would also help the generation of raw materials for the industry, Gadkari said. (PTI)
Can the Alang shipyard model of dismantling ships from around the world, and becoming a global centre for ship-breaking and ship-recycling, be replicated for recycling automobiles? Nitin Gadkari, Union minister, MoRTH (ministry of road transport and highways) and shipping, urged industry to set up vehicle recycling businesses along the coast of the country, with port connectivity, to create an ecosystem for dismantling old vehicles and recovering precious metals. These players could not only recycle automobiles from India but also accept vehicles for recycling from across the world, he suggested.

A vehicle-scrapping plan is being proposed by the government for 15-year-old heavy and medium commercial vehicles, as it would not only boost growth of the Indian automotive industry with renewed demand, but would also help the generation of raw materials for the industry, Gadkari said. Recycling of aluminium, copper, steel and plastic will enable automotive companies to get raw materials at a cheaper price and improve their competitiveness in the market, he said. Industry is currently importing these raw materials at a higher price. These imports could be reduced and foreign exchange conserved, he pointed out. The minister was speaking at the AGM of the Mahratta Chamber of Commerce, Industries & Agriculture in Pune on Friday.

Gadkari said those scrapping old vehicles will get tax exemption from both the central and the state governments.

Source: financial express. 24 September 2016

GMS: One Step Closer to Ratification of the Hong Kong Convention

Denmark’s recent decision to move ahead with the ratification of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) in Spring 2017, brings the legislation one step closer to implementation. On the announcement of this encouraging news Dr Anil Sharma, President and CEO of GMS, the world’s largest buyer of ships for recycling, commented:

“Denmark’s steps towards the ratification of the HKC is a clear endorsement of the growing international support for the principle that the industry should work to improve the safety and environmental standards at ship recycling yards, wherever in the world they may be. The standards laid out in the HKC and its guidelines are enabling the industry to achieve sustainable goals for ship recycling. Importantly, the market is beginning to hold companies accountable for out-dated procedures. There is increasing momentum towards voluntary Statements of Compliance in line with the HKC and more owners are now opting for green ship recycling when vessels are sold.”

“Denmark’s support of the HKC is of significant importance. It will have an enormous impact globally on the sustainability of ship recycling and, consequently, on the lives and conditions of shipyard workers. GMS has always supported safe and environmentally sound ship recycling becoming the norm, rather than the exception and the entry into force of the HKC will ensure this happens.

“As the HKC progresses towards enforcement, the European Union’s Ship Recycling Regulation is also entering a critical stage, as a decision is awaited for the yards in Alang holding Statements of Compliance with the HKC whether they should be included on the list of EU approved recycling yards.

“These yards have proven that they meet the high safety and environmental standards laid out in the HKC through significant investment, training and development within the region. Excluding these yards would create an insurmountable divide within the industry based solely on their geographic location, and threaten to halt the positive progress made by the HKC in South Asia.

“Denmark’s decision to move towards the ratification the HKC shows a growing international support for sustainable recycling across the globe. We hope that other countries will follow Denmark’s example through ratification and vocal support for its high standards and principles.”

Source: Hellenic shipping news. 20 September 2016

Panama accedes to ship recycling convention

The International Maritime Organization’s effort to implement new international regulations intended to the promote safe and environmentally sound ship recycling received a major boost this week with ratification by the world’s largest largest flag state.

On Monday Panama became the fifth IMO Member State to accede to the IMO’s Hong Kong International Convention for the Safe and Environmental Sound Recycling of Ships (Hong Kong Convention), which is aimed at ensuring that ships sent for scrap do not pose a risk to human health and safety or to the environment.

The Hong Kong Convention addresses issues related to ship recycling by creating a set of standards covering the handling of hazardous materials, the design and construction of ships, recycling facilities, and the preparation of ships sent for scrap. Adopted in 2009, the Convention won’t enter into force until ratification by 15 States representing no less than 40% of the world fleet’s tonnage.

With it’s open system, Panama manages the world’s largest ship registry, registering over 8,000 vessels representing a combined 218 million GT, or approximately 18% of the world merchant fleet.

Prior to Panama, the Hong Kong Convention had only been ratified by Norway, Congo, France and Belgium, making for a little over 2% of the world’s tonnage, according to the IMO.

Last week Denmark also pledged to ratify the convention in Spring 2017.

Shipbreaking Yards

The Hong Kong Convention is also pushing scrap yards to upgrade facilities to comply with its standards. There are even a number of yards now in Alang, India, a shipbreaking hub notoriously known for its poor conditions and polluting practices, that have received Statements of Compliance with the Hong Kong Convention. The improving conditions have even prompted the world’s largest shipping company, Maersk Line, to return to Alang where the company says it can save it can save $1 to $2 million in recycling costs per ship and help quality yards improve even further.

According to the NGO Shipbreaking Platform, a critic of Alang and unsafe ship breaking practices, 60% of 768 ships sold for scrap in 2015 were broken up along the shores of India, Pakistan and Bangladesh, where the controversial practice of beaching is still used.

By the end of 2016, the European Union is expected to decide whether or not to include Southeast Asian yards on a list of approved facilities that comply with sustainable recycling practices for EU-flagged ships. The EU law currently is expected to favor facilities in places like Turkey and China.

The NGO Shipbreaking Platform has been critical of ship owners, including Danish-based Maersk Line, for using ‘flags of convenience’, i.e. Panama, in order to bypass EU law.

“As the HKC progresses towards enforcement, the European Union’s Ship Recycling Regulation is also entering a critical stage, as a decision is awaited for the yards in Alang holding Statements of Compliance with the HKC whether they should be included on the list of EU approved recycling yards,” commented Dr Anil Sharma, President and CEO of GMS, the world’s largest buyer of ships for recycling and proponent of safe ship recycling in Alang.

“These yards have proven that they meet the high safety and environmental standards laid out in the HKC through significant investment, training and development within the region. Excluding these yards would create an insurmountable divide within the industry based solely on their geographic location, and threaten to halt the positive progress made by the HKC in South Asia,” Dr. Sharma added.

Source: gcaptain. 20 September 2016

Gujarat maritime sector to get over Rs 400 cr aid: MoS Mandaviya

The minister said that the Alang ship breaking yard was being developed into a "green" ship breaking yard to help it handle old Naval ships and even hazardous vessels.

The Narendra Modi government will be providing financial assistance to the tune of over Rs 404 crores for a host of maritime projects in Gujarat, including the delayed Ghogha-Dahej Ro-Ro project, two fishing harbour and sprucing up infrastructure at the Alang ship breaking yard, said Mansukh Mandaviya, Union Minister of State for Shipping, Chemical & Fertilizers and Road Transport & Highways, during his visit to Gujarat on Thursday.

“We are expecting to begin Ro-Ro ferry service between Gogha and Dahej by mid-2017. For this the Centre will provide an assistance of Rs 117 crore which will be used for dredging,” the minister said after his meeting with officials of Gujarat Maritime Board (GMB) at Gandhinagar. The Ro-Ro Ferry Service proposes to the Gulf of Khambhat by linking Ghogha in Bhavanagar district with Dahej in Bharuch district. Narendra Modi had laid the foundation stone of the project in January 2012 as the chief minister of the state.

“A Rs 200 crore Workers Welfare Fund will also be used to build hostels and hospitals at Alang,” the minister said adding that the Alang ship breaking yard was being developed into a “green” ship breaking yard to help it handle old Naval ships and even hazardous vessels.

Talking about the projects that has been given clearance by the Modi government, Mandaviya talked about setting up of a marine shipbuilding yard near Bhavnagar. “Under the Sagarmala project, a new road linking Alang-Mandva-Mithivirdi-Hathan-Bhavnagar will also be built,” he said.

“We will also be providing Rs 50 crore of financial assistance in developing fishing harbour at Veraval and Mangrol. Another Rs 37 crore will be given for building new berths for coastal cargo and passenger services at Porbandar,” Mandaviya told in his interaction with media persons.

50-50 partnership on SRP battalion for GMB ports
The minister said that his ministry was still considering GMB’s proposal to raise a SRP battalion for guarding minor ports in Gujarat. “The state government and the Central government might share the cost of this project (Rs 350 crore),” Mandaviya said.

GMB aims at handling 360 MTPA cargo
He also said the minor ports under GMB have targeted to handle 360 MTPA (million tonnes per annum) of cargo for 2016-17 fiscal. Last year the minor ports in Gujarat handled about 340 MMT of cargo.

Source: indian express. 23 September 2016

19 September 2016

10-year-old boxship sent for scrap

The Viktoria Wulff becomes the youngest boxship to date this year to have been sent for scrap. Just 10-years-old, the 4,546 teu panamax is owned by Erste RHW Schiffahrts and flagged with Liberia.

Panamax boxships have been sent en masse for scrapping this year as rates for this ship size in particular have faded away. Prior to the Viktoria Wulff, the youngest boxships sent for recycling this year had been 13 years-old. Clarksons Research shows the German owner managed to gain a very decent $303 per ldt for the ship scrapping.

“This is surprising as the Eid holidays have meant that it has been a very quiet week in the ship recycling sector. However, the signs have been there for a while, as the lack of tonnage started to push rates up and we have been moving towards a scenario where yards have emptied and are open across the board in the Indian Sub-Continent. This would help create healthy competition once again, which can only benefit owners,” Clarkson Research said in its latest weekly report.

The broking outfit also noted that another 13-year-old vessel, the Hang Jun 5, owned by another German owner, Hammonia Reederei, was also sold for recycling last week.

Source: splash 24/7. 19 September 2016

16 September 2016

Dry bulk carriers increasingly heading for demolition

Some surprising sales – particularly of panamax bulkers – seemed to indicate a firming market this week. However, many of these improvements do appear illusory as cash buyers continue either to speculate on prices or offer crazy numbers on the back of demand from a specific ship recycler from the Bangladeshi market, who has taken a keen interest on a particular unit. On the other side, India remains stagnant and pragmatic, unwilling to jump up by more than a few $/LDT (even on select / favored tonnage being proposed to local recyclers) as Pakistan continues to remain cautious for the most part, unable to match Bangladesh’s pricing / sentiments, despite demand clearly improving over the recent few weeks. There still appears to be some uncertainty in Pakistan as to just how much, the implemented taxes will affect the bottom line of local ship recyclers and there is talk that some buyers may even sit out the month of September entirely, until this is fully understood. Bangladesh therefore is the one market that is presently leading international prices, yet demand there remains specific and volatile with buyers often changing their mind on pricing particular vessels, from one moment to the next. As the fourth quarter approaches, it will be interesting to see whether this recent momentum will be maintained going forward or whether it is just another flash in the pan”, GMS concluded.

dry_Bulk_cargo_ship_closeup_cloudy_horizon HUGE

In a separate report, shipbroker Intermodal noted that “a rather unexpected increase of dry bulk demo candidates in the market, gave a further extension to the healthy activity we have been noticing in the Indian subcontinent market during the past week, while the cherry on top of that was no other than the firming of prices that took place, which was neither insignificant nor expected. The answer to the question whether pure speculation or actual end demand is currently behind this strong and rather sudden momentum is probably positive. The reality is that fundamentals have not changed materially in any way for the market to keep firming at the moment and that all this hype could well be the result of cash buyers trying to prop up prices, possibly to support previous purchases as well. We have indeed seen some very impressive levels last week being offered for dry bulk tonnage, with Bangladeshi breakers leading the way and forcing their counterparts to follow up to a certain degree, while in our opinion, restricted supply of demo candidates is key in order to support current price levels. Prices this week for wet tonnage were at around 180-290 $/ldt and dry units received about 170-280 $/ldt.”, Intermodal concluded.

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Similarly, in another report, shipbroker Allied Shipbroking said that “with the number of demo candidates in the market having been reduced considerably, it looks as though the conditions might have been right for competition to help fuel some meaningful increases. We have seen this in part play out, despite most end buyers still holding a fairly cautious stance, as there is little to support any excess in terms of speculative buying. In part the lack of demo candidates has played its part, though we haven’t seen buying appetite do it’s typical post-summer spike which would be calling for a completely different market given the current circumstances. There is a sense that we may well be in the process of another upward market movement over the coming weeks, especially as demo candidates are likely to remain relatively few and far between for now, with most sellers likely holding out for a hopeful seasonal improvement in the freight market, looking to make some last minute earnings before they send of their overage units to be beached”.

Source: Hellenic shipping news. 01 September 2016

Denmark developing regulations on ship scrapping

European country calls for ship lines to adhere to Hong Kong Convention for safe ship dismantling.

The Danish Minister for Environment and Food is preparing regulations to ensure Danish shippers use appropriate scrapping of vessels.

Denmark is taking the lead in passing regulations that will ensure the country follows the Hong Kong Convention, which is a global agreement to ensure that ships are scrapped and recycled appropriately.

To accomplish this, Esben Lunde Larsen, Denmark’s Minister for Environment and Food, is preparing new regulations to make sure that people and the environment are protected globally when ships are broken up and the metal is recycled.

According to Larsen, worldwide, about 1,000 merchant vessels are broken up every year with the metal being recycled. A problem has been that a majority of the scrapping takes place in countries such as India and Bangladesh, which typically are not as focused on the environment as European countries.

“Scrap ships must not pollute Third World beaches. Ships are often hazardous waste and they must be broken up under appropriate conditions so that they do not pose a danger to human health and safety or the environment,” says Larsen. “Seeing the shipyards in Asia at which many scrap ships are broken up has made a strong impression on me.

“Therefore, adapting Danish regulations so that we can accede to the Hong Kong Convention has been an important priority, and it will help set global standards to ensure ships are broken up safely. This will send a strong signal to other countries, and the more countries that accede to the Convention, the quicker we can get it to enter into force.”

According to the Danish Shipowners' Association, an average of ten Danish-operated ships are scrapped every year, the overwhelming majority processed in India, China and Turkey.

The Hong Kong Convention was adopted by the UN International Maritime Organisation back in 2009. Parts of the Convention have already been adopted by the EU in the Ship Recycling Regulation, and Danish accession will make it more likely that more countries around the world will also accede to the Convention.

“I’m extremely pleased that the Minister is now making sure that Denmark will soon be able to accede to the Convention. Up to 70% of the world’s scrap ships are broken up in Third World countries, so global regulations are vital to ensure that ships are broken up appropriately. Therefore, we must urge more countries to follow in Denmark’s footsteps so that the Convention can finally enter into force. Until this happens, we’re encouraging all our shipping companies to comply with the upcoming requirements voluntarily,” said Anne Steffensen, director general of the Danish Shipowners' Association.

“The Danish Metalworkers’ Union and the Central Organisation of Industrial Employees are very pleased that the Danish government is now acceding to the Hong Kong Convention. We’ve been working for a number of years for full ratification of the Hong Kong Convention so that our foreign colleagues in India, Bangladesh and Pakistan, for example, can have reasonable working conditions when breaking up ships. The government’s proposal has taken us a good step forward,” says Claus Jensen, president of the Danish Metalworkers’ Union and the Central Organisation of Industrial Employees.

The new regulations have just been sent for consultation, and Denmark expects to be able to accede to the Convention in spring 2017.

Source: recycling today global. 15 September 2016

15 September 2016

Smashed Fortunes

How market speculators in China upended life in India’s ship-recycling yards

ALANG, India—In the world’s biggest ship-recycling yard, dozens of men toil under a blazing sun, carving up the remaining portion of a vessel on the seashore. During the nearly five months it has taken for the ship they are working on to arrive at the yard and get broken apart for scrap, the price of the steel the yard is culling has skyrocketed, then plummeted—dragged along by roller-coaster trading thousands of miles away in China.

The yard owners of Alang, where half of the world’s ships are recycled, say they are shocked by the volatility—the like of which they hadn’t seen since the global financial crisis in 2008. Many of the yards here, in the western Indian state of Gujarat, are saddled with losses from buying near-record numbers of boats when steel prices were surging earlier this year, then selling the scrap metal after prices had crashed.

Now, though steel prices in China have risen from a May low, the scrappers are struggling with a glut of metal in India that is keeping a lid on domestic prices, and have slammed the brakes on more ship buying.

“From last December onwards, we saw prices improving suddenly, so all of us purchased ships,” says Ramesh Aggarwal, yard owner at Alang’s Hooghly Ship Breakers Ltd. “Now all of us are facing a similar situation because of the fall in prices. Our profits have been wiped out.”

The whiplash rattling the multibillion-dollar ship-recycling industry illustrates how the rapid growth of commodities futures trading on China’s still largely closed domestic markets is rippling into the real world. The industry is a leading employer in Bangladesh, and an important one in Pakistan and India, providing jobs for hundreds of thousands of mostly poor workers.

The volatility coincided with the global shipping industry coming under pressure even as demand for its services have been rising. The crunch in global trade has left owners sitting on too many ships and eager to sell them for scrap.

Until a few years ago, Alang’s yards watched steel prices quoted in both international and South Asian markets to decide whether to buy ships, and how much to pay for them. Those prices rose and fell largely in line with supply and demand for the metal in markets like China, which is the world’s largest producer and consumer of steel.

That dynamic changed when China’s breakneck growth started to slow several years ago. The country kept its forges blasting while many other global steel producers cut theirs back. That made China more dominant in global steel markets even as prices plummeted due to a surplus of the metal. China has comprised around half of the world’s steel output since 2013, versus nearly a third in 2008. Last year, China’s steel exports alone topped the total steel output of the No. 2 producer, Japan, and were around 40% more than the total production of the U.S.

Alang’s scrapyards, which sell to Indian buyers, began to contend with a flood of cheap steel from China, and its scrap prices started to more closely track steel prices in China, reflected in futures contracts traded in Shanghai.

Shanghai’s influence on Indian scrap-metal prices “has increased substantially over the past one-and-a-half years,” said Anil Sharma, chief executive officer of GMS, the world’s largest buyer of ships and offshore assets.

Late last year, Shanghai’s futures markets started heating up. Opportunistic Chinese traders saw low steel prices as a buying opportunity, and poured millions of dollars into futures contracts for steel rebar, a reinforcing rod used in construction, and iron-ore, a steelmaking component. Prices of steel rebar shot up by more than 50% in the first four months of 2016.

In Alang, shipyards whose businesses had slowed during the steel-price slump of the past few years rushed to buy boats, spending millions of dollars per vessel. During the first six months of this year, 185 vessels arrived at Alang’s yards -- nearly equal to the 196 for all of last year. Workers started pouring into Alang from surrounding villages, drawn by the extra jobs.

Rocking the Boat:

China's volatile trading in steel has disrupted India's ship-scrapping industry.

China steel-rebar price:



Ships arriving for scrapping in India:


India scrap-steel price*:


Note: 1,000 yuan=$150.30; 10,000 rupee=$149.80 *Heavy Melting Scrap-II, an Indian benchmark Sources: Future Source data (rebar price); Ship Recycling Industries Association (ship arrivals); India Steel Market Watch (scrap price)

The boom was short-lived. Chinese regulators, fearing a speculative bubble in commodities prices, raised the amount investors must deposit to trade iron ore and steel rebar. Prices on Chinese exchanges began tumbling in late April and collapsed in May, falling nearly as low as they were at the start of the year.

The rapid seesaw in prices—which fell as much as 30% in four weeks—caught yard owners like Mr. Aggarwal off guard. The yards operate on razor-thin margins, without hedges, and they typically won’t buy boats if they think prices will fall significantly during the three or four months it takes between the purchase of a ship and the time it is disassembled for scrap. The whipsawing prices this year meant expected profits for their scrap metal turned to losses for most owners.

The last portion of the majestically-named M.V. King David, a bulk carrier once used to fetch iron ore from Australia to China, is beached for scrap at Hooghly Ship Breakers Ltd.
The last portion of the majestically-named M.V. King David, a bulk carrier once used to fetch iron ore from Australia to China, is beached for scrap at Hooghly Ship Breakers Ltd. PHOTO: KARAN DEEP SINGH/THE WALL STREET JOURNAL

Some yards tried to renegotiate contracts after the vessels arrived; others held on to the metal hoping prices would rise again.

One yard owner, who asked to remain unnamed, said he bought a ship in January for around $280 per ton, including the cost of labor. He ended up selling the scrap metal at a loss, for $250-$260 per ton, when the ship was being broken up in April and May.

Workers at a shipyard in Alang use a cable to haul the last portion of the M.V. King David, a bulk carrier that was sold to be broken down and turned into scrap steel. Such ships also contain furniture, microwaves, dinnerware and other goods, which end up being sold at a local bazaar.
Workers at a shipyard in Alang use a cable to haul the last portion of the M.V. King David, a bulk carrier that was sold to be broken down and turned into scrap steel. Such ships also contain furniture, microwaves, dinnerware and other goods, which end up being sold at a local bazaar. PHOTO: KARAN DEEP SINGH/THE WALL STREET JOURNAL

“You can say we are caught in a casino-like situation,” said Mr. Aggarwal, who is also the secretary of the Ship Recycling Industries Association (India).

Prices of steel rebar futures in Shanghai have risen again since late July to just below the highs in April, but Indian scrap prices have lagged behind due to excess supply. Shipyard owners say they are cautious about making fresh purchases after being badly bruised by the previous volatility.

In the rows of wooden shacks that house thousands of workers at one yard in Alang, many men are waiting without pay in case more ships arrive, but face the prospect of returning home with no money for their families.

Many poor men head to Alang seeking higher paychecks than they can earn back home. Above, a worker cuts through metal at R.L. Kalthia Ship Breaking Pvt Ltd. in Alang, India.
Many poor men head to Alang seeking higher paychecks than they can earn back home. Above, a worker cuts through metal at R.L. Kalthia Ship Breaking Pvt Ltd. in Alang, India. PHOTO: KARAN DEEP SINGH/THE WALL STREET JOURNAL

Sushil Kumar Pal, 20, is worrying about money for his two younger brothers’ schooling and for his elderly parents.

“There are so many workers here and not enough jobs going around,” he says. “So how will anyone work?”

Source: wall street journal. 5 September 2016

Denmark to Ratify Hong Kong Convention

The Danish Minister for the Environment and Food has taken the first steps towards implementing rules for the safe recycling of vessels through the ratification of the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships, 2009.

Denmark now expects to ratify the Convention in the spring of 2017.

Worldwide, approximately 1,000 merchant vessels are being scrapped every year. The vast majority of vessels are sent to Asia to be dismantled, and welfare and environmental conditions in countries such as India and Bangladesh have come under focus as may not be comparable in standard to those expected in Europe.

The Minister, Esben Lunde Larsen, says: “It can be overwhelming to see the conditions under which vessels are scrapped at the shipyards in Asia. Therefore, it has been a major priority to adapt the Danish rules so we can ratify the Hong Kong Convention, which helps to establish global standards for safe ship recycling. It should send a strong signal to other countries - the more countries ratify the convention, the faster the Convention will enter into force.”

According to the Danish Shipowners’ Association, ten Danish operated vessels are in average being recycled every year. A small part is recycled in Denmark, and the rest is recycled mainly at shipyards in India, China and Turkey.

Parts of the Convention have already been adopted in the E.U. with the Ship Recycling Regulation, and with Denmark's ratification the possibility of more countries doing the same increases.

“It is very positive that the Minister now ensures that Denmark will ratify the Convention,” says Anne H. Steffensen, Director General and CEO of the Danish Shipowners’ Association. “Up to 70 percent of the world's ship recycling takes place in third world countries, so global rules are essential to ensure that recycling is done in a responsible manner. We must therefore push for more countries to follow suit so that the Convention can finally enter into force. Until that happens, we encourage all our shipping companies to meet the future requirements voluntarily.”

For the Convention to enter into force, it requires that it must be ratified by at least 15 countries whose combined merchant fleet represents at least 40 percent of the global merchant fleet’s gross tonnage. Both major flag states and the major ship recycling states must ratify in order to meet the requirements of the convention.

To date, only Norway, Congo, France and Belgium have ratified the Convention.

In 2015, 768 vessels were globally sold for recycling. 469 of these (equivalent to approximately 60 percent) were recycled on a beach in Bangladesh, India or Pakistan (Source: Shipbreaking Platform annual report for 2015).

Source: maritime-executive. 14 September 2016

12 September 2016

The Economics of Ship Breaking & Scrapping

Sometimes being an industry supplier offers interesting insights – your business is touched by the ups and downs of the charter market, but you are never so involved in it that you lose sight of the big picture. Some of our clients have been hit hard by the market’s general downturn; one client I visited last month began 2008 with 41 maritime software licenses for their vessels – just seven remain today.

“We just sold another ship yesterday,” he said, and then after a pause: “Please spare me the update costs for this one, it won’t receive any.” Of course, I nodded. It might be unpleasant to see another piece of your development finance blow off, but it might be even more unpleasant to see your ship management company being dismantled piece by piece. “So what will they do with the vessel?” I asked, he shrugged and said: “I would put my two cents on a beaching.”

Beaching is an ugly word in the maritime industry. As we know, it holds the silent threat of working men’s death and environmental pollution. Greenpeace will chase you and widows will curse you, but what choice did he have? After all, the countries involved could simply forbid the practice or release new regulations. Well, they could - but they won’t, and here is why:

The Economy of the Ship Breaking and Recycling Industry (SBRI)
What started in 1965 with the stranded vessel M D Alpine in Chittagong became the most important part of Bangladesh’s national steel production, satisfying up to 35% of the current demand of five million tons (2015). The scrap metal industry feeds over 350 steel re-rolling mills and 22,000 workers in approximately 40 yards – dragging with it a long tail of 200,000 indirectly employed workers (e.g. supply chain and downstream market). If extended families are taken into account, the numbers double.

The picture in India and Pakistan is very similar. India hosts the world biggest beaching facility in Alang, accommodating 66,000 yard workers.

These statistics support the fact that this industry involves thousands of companies and influences the shape of the local area, government and society for a considerable distance inland. The SBRI plays a vital role in the national budget and development plans of Bangladesh. For example, 40% of the national steel demand is driven by public construction  projects and so 35% of steel demand is covered by recycled re-rollable scrap and melting scrap, which is used especially in construction.

The operators involved (e.g. steel mills, suppliers and local authorities) resist changes that could endanger their business; environmental protection laws and wage rises are major threats. This is the main reason why neither India nor Pakistan nor Bangladesh would ratify the “Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships” of 2009 – a currently inactive IMO attempt to regulate ship breaking.

History shows that it is a volatile business, taking place only in Europe and the USA up to the end of the second world war. Due to rising demands for steel in Asia and the availability of a cheap workforce the industry began to relocate there. By 1977 more than 50% of all recycled ships had been beached in Taiwan (3,391 vessels). A decade later in 1990 it was only two ships!

How much do they make?
The yards have a good standing in Bangladesh. In mid 2009 Maria Sarraf’s team estimated in their report “Ship Breaking and Recycling Industry in Bangladesh and Pakistan” (Report No 58275-SAS) that the average profit from a Panamax oil tanker with 80,000 DWT is approx. $920,000. (See Chart 1)

The vessel is often bought via middle men who establish contact between the international owner and a local yard. Such agents are usually brokers based in London, Hamburg, Dubai or Singapore specializing in buying scrap ships from shipping companies in order to resell them. They also might change to a favorable flag and/or class.

The yard will receive a loan from a local bank with the obligation to pay it back within six months – the time required in order for the vessel to be stripped. Owners should be aware that the price might be re-negotiated when the vessel arrives at Chittagong if scrap prices have decreased.

Multiple administrative processes are set in motion as soon as the ship arrives in the international waters off Chittagong. The industry is supervised by the Ministry of Port and Shipping and the Ministry of Industry, whereas the Explosive Department is responsible for checking the vessel and declaring it gas-free (merely nominal). Import tax must be paid and valuable items such as the radar system will be distributed to the navy. Further checks and certificates must be effected before the Chittagong Port Authority allows beaching.

The beached vessels are then handled by yard workers. The yards attract mainly people from poor districts – in Chittagong 95% are migrant laborers. Of course, they enroll because it is their only option if they want to feed their families; the daily wage is approximately $3 - $7 with a working time of eight hours per day and an expected extra four paid hours. In comparison, a rickshaw puller would have to work more than a week to earn this, but he does not risk his life doing it.

Hidden Costs
However, the almost one million dollar profit per beached ship comes at a high price. Bangladesh and other beaching facilities in Asia have been polluted for decades with hazardous chemicals. PCB, asbestos, TBT and lube oils are often just dumped inland, burned during the recycling process or sold to local markets, they also contaminate the yards themselves. This might raise concern soon to a number of countries due to rising sea levels.

The sea level at Chittagong beach might not rise more than 0.4 meters in the future, but it would still influence high tides which regularly surge 3 to 10 meters above sea level and would cause an additional 11,000 to 25,000 sq. m. of polluted sand to be washed into the ocean. Mrs. Sarraf suggests in her study that this could submerge up to 12,000 kg of lead, 60 kg of cadmium, 6,000 kg of chromium and 7 kg of mercury at Chittagong beach alone. Effects on the health of local residents and workers can be observed easily. Rising cancer rates and intoxications from chemicals like lead and asbestos, and injured workers (88% of all workers) are a big social problem.  Furthermore, Greenpeace claims in its report “End of Life Ships“ that between 60 and 100 people per year die at Chittagong, based on local media news.

Improvements
Although the business has existed for 50 years in Bangladesh, improvements have only recently been made. Public awareness raised by investigative reports such as “Working Man’s Death” by Michael Glawogger has ramped up international pressure. This might be part of the reason for the improvements, which include more workers wearing protective equipment like welding goggles and gloves, enhanced worker training and more local authorities fighting for better working conditions and healthcare.

In Alang, India the first workers union has been formed, stepping in when compensation for widows or injured workers is not paid. Despite this, little has been achieved. It is possible to do a lot for the local yard workers, residents and the supply chain. Receiving a couple of hundred thousand dollars in tax and duties per ship, Bangladesh’s authorities have the means to improve yard supervision and streets, or to invest in waste recycling. All the reports cited in this article make numerous suggestions about what could be done – ranging from MARPOL reception facilities for operational waste (e.g. paint) to road maps for improving local conditions.

Necessary measures to achieve HKC compliance in Bangladesh:, Maria Sarraf, 2008 (See Chart 2)

If the assumptions of Mrs. Sarraf are correct, Bangladesh earns at least $24 million annually from tax and duties related to ship scrapping. Hence a long-time investment of $53 million over 10 years seems feasible as it will avoid high costs in the future. Additionally, even small steps like avoiding the manual handling of asbestos without protective gear can bring great improvements.

However, the sad truth is that nothing is likely to happen – and for the usual reasons: the problems are remote, and who cares about the poor, when so many people are making a profit?

Source: marine link. 24 August 2016
http://www.marinelink.com/news/economics-scrapping414382.aspx