“WORST IN 30 YEARS”
The situation in Pakistan appears equally bad. “It has always been a cyclical business but people who have been in this industry tell me this is the worst in 30 years,” said Shoaib Sultan, the owner of Horizon Ship Recycling in Karachi.

The story in Bangladesh is similar. “Three years ago there were about 80 yards, now it’s down to 25. I think another 10-15 yards will go,” said Zahirul Islam, director of PHP Shipbreaking and Recycling Industries Ltd in Chittagong.

Ship breakers globally bought 25.2 million deadweight tonnes (dwt) of vessels up to early July, against 33.8 million dwt all of last year, with Bangladesh the largest buyer, according to shipping services firm Clarkson.

“Everyone thought prices will improve and bought a lot, but now they are sitting on huge inventories,” said Islam. “It will be a disaster in the coming months.”

It takes up to nine months for a typical bulk carrier in India to be broken up and its steel processed, said Rakesh Khetan, chief executive of Singapore-based Wirana Shipping Corp, a major buyer of ships for scrap.

ENVIRONMENTAL CONTROLS
As well as facing pressure from cheap Chinese steel, there are also calls to stop beach scrapping because of the danger and environmental damage from pollutants left to drain into the sea.

Highlighting the risks, five people were killed and at least 10 injured after an explosion in a chemical tanker being dismantled in Alang last year, local media said.

Workers can also face health hazards such as lead paint and asbestos when working on ships.

The European Commission will introduce tougher environmental controls some time after December. While not specifically banning beach scrapping, owners of ships registered in EU countries will have to scrap them at approved facilities, a move that could favour countries such as China and Turkey where ships are taken apart in docks.

“The European Commission’s intention is not to discourage vessel owners from using facilities outside of the EU but to discourage ship owners from using facilities which have proven to present very real danger to life and the general environment,” said Mark Clintworth, head of shipping at the European Investment Bank.

In a bid to allay environmental concerns, some yards in South Asia have cemented their work area to try to prevent seepage of oil or chemicals, but many lack the money to do this.

“It takes about $5 million to improve a yard. How can somebody do that when they are bleeding?,” said Islam of PHP Shipbreaking in Bangladesh.

Clintworth said his bank and the European Commission could provide investment for South Asian ship scrappers to improve existing operations, as well as for safer and more environmentally friendly new facilities.

But for many that could come too late and some, including Alang’s Sagar Laxmi Ship Breakers, are simply targeting other industries such as construction.
(Source : Reuters)