Ship Recycling Industry Is Moving Forward

With an increasing number of ship recycling yards moving towards implementing the Hong Kong Convention, conditions seem to be changing rapidly towards an exciting future. In its latest weekly report, shipbroker Clarkson Platou Hellas said that the ratification of the Hong Kong Convention (HKC) has brought major new developoments, as already, almost all the yards in India, are now fully compliant. Additionally, the shipbroker added that in the latest annual Tradewinds Ship Recycling Conference “there was confirmation from the Bangladeshi delegates that four of their yards are HKC approved by NK Class and showing good momentum in seeing other yards in Chattogram work towards HKC compliancy and, importantly, looking at acceptable avenues for the downstream waste management”.

The shipbroker also noted that “there was some positive news from Pakistan where a presentation provided evidence that they are attempting to upgrade their recycling yards to conform with the Hong Kong Convention requirements – whether they can do this by 2025 when the HKC comes into force remains to be seen. However, with no intertidal zone as such, the possibility is that the standard of yards, if improved correctly, will be on par with Turkey. This will be an interesting year and a half for the Pakistan recyclers and next year’s conference (potentially moved back to Europe), may see this improved infrastructure in place at some of the yards. What was evident throughout the discussions was the confusion being caused by too many regulations and the need for one global ship recycling permit, which all relevant bodies could adhere to, one which the European Union, environmental groups and flag states/regulatory bodies could all accept enabling a more sustainable and transparent recycling industry for ship owners, recyclers and everyone involved could work with.

It did feel like a very productive conference again – however, the constant questions from the recyclers were “when will the ships start to arrive?” The market remains quiet and starved of tonnage, evident by the fact that there were few disturbances during the conference, no sound of ringing phones and participants up and down constantly leaving their seats to discuss business, this was left for the coffee breaks and post conference aperitives. One other topic that attracted lengthy discussions, was concerning the ‘shadow fleet’. With units/entities sanctioned, the real concern was where these units will end up when it is time for their inevitable recycling. The majority of the shipping community, including the recyclers themselves, would not be able to touch the vessels when the time comes which could cause a serious potential environmental disaster on the oceans”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate report this week, GMS, the world’s leading cash buyer of ships said that “as deals continue to be concluded into Alang, the Indian ship recycling sector remains on a positive footing overall, with Pakistan and (especially) Bangladesh still lagging behind. Despite steel plate prices coming off by about USD 11/Ton and the Indian Rupee weakening marginally over the course of the week, the overall outlook for India still remains positive. Several Ship Recyclers from the sub-continent markets were gathered at the annual Tradewinds Ship Recycling Conference in Singapore this week, as they discussed market sentiments, fundamentals, and the latest regulations moving forward. There was also a healthy debate about the potentially blurry and contradictory nature of EU vs HKC Recycling and the various rules and requirements imposed on each vessel. Owners, regulatory bodies, End Buyers, Cash Buyers, monitoring companies, Underwriters, Brokers, and various other key players from the industry, all convened for what was another good turnout at the forum, in a landmark year in which, the HKC has finally been ratified in Bangladesh, ahead of its entry into force two years later, whereafter, all yards in Chittagong must be HKC approved by a certain date in the future, in order to operate. There remains no change in the overall inertia of all markets as steel plate prices continue to flatline in both Bangladesh and Pakistan and their respective currencies continue down the same trajectory as last week. Even Turkey spent much of the week as last, with steel plates that were slightly weaker and still without any fixtures to support local demand. In terms of supply, expect the usual flow of feeder Containers and Dry Bulk vessels as we approach the end of the year, at what is perceived to be historically firm recycling levels in the low to mid 500s/LDT. Overall, even though the volumes of recycling tonnage remain muted, many in the industry are expecting supply to pick up going into 2024, and all of the recycling markets are firing (hopefully) on all cylinders once again, with the ability to open L/Cs with greater security and efficiency than we have seen thus far this year (especially in Pakistan and Bangladesh)”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide