Markets - Recycling - Frantic buying - BIMCO slams EU regs

Apr 18 2019

Frantic buying ensued last week as the upcoming monsoon season and annual budgets begin to close in across the various subcontinent locations.

These are expected to have an impact within the next four to six weeks or so, GMS said in its weekly report. 


Once again, Bangladesh led the way with most of the buying, particularly for a majority of the large LDT Capesize bulkers, VLOCs and containerships on offer.


However, there have also been some interesting sales into India, particularly one container vessel that was sold for a massive USD 480 per ldt last week!


Pakistan has also been creeping up of late as demand grows markedly following over six months of inert buying. However, local offerings still remain among the lowest across the subcontinent, even though there are signs of life starting to emerge once again.


Finally, as steel plate prices soften in Turkey whilst the Lira plummeted last week, local sentiments weakened further, as increasing declines awere feared in the week(s) ahead.


As port reports start filling up in India and Bangladesh after an extremely busy March, we can only speculate on just how much longer this aggressive buying will last, GMS said.


The feeling is that Bangladesh end buyers want to import vessels before the budget due on 5th June, in fear of potential duties/taxes being imposed on the steel sector that would make it more expensive to purchase ships, thereby lowering local offerings.


There is also the traditionally weaker monsoon season to factor in, which will begin around the end of May, whereby wet tows will not be permitted and much of the labour on the yards return to their home towns during the rainy season, as beachings and cutting activities are hampered, GMS said.


Meanwhile BIMCO has taken issue with the EU recycling edict.


Only nine shipyards, out of 26, on the EU list of approved recycling facilities are realistically open for ship recycling, and only three of the 26 could recycle a large ship (Panamax or larger), a study commissioned by the organisation showed.


“The EU list is hard to take seriously. I called one of these ‘recycling shipyards’ a few months ago, and they hadn’t even started building the yard yet,” said Angus Frew, BIMCO Secretary General & CEO. ”The list look a little like protectionism and clearly disadvantages European shipowners.” 


Regulation (EU) 1257/2013 of the European Parliament and the Council on ship recycling came into force on 1st January, 2019. It requires EU flagged ships to be recycled at approved yards on the EU list.


EU yards are apparently allowed on the list without fulfilling uniform criteria, whereas non-EU yards have to be inspected by European Commission appointed auditors according to clear criteria before inclusion on the list. So far, only two Turkish and one US yard have been included, BIMCO claimed.


The organisation said that it believed that audits should consider and reward improvements to health, safety and environmental protection that have been achieved at facilities in Asia. Furthermore, there should also be actual inspection of the EU yards.


Currently, some Asian yards have waited two years for approval after submitting their application without any prospect or pathway to inclusion on the list.


“BIMCO wants the facilities to improve their safety and environmental performance, but if there is no path for non-EU facilities to get on the EU list, the regulation will continue failing to achieve that objective, and simply be an act to protect the EU ship recycling market,” Frew said.


The Hong Kong Convention needs to enter into force as soon as possible, and it is essential that improvements are recognised also from the decision makers in Europe. India, Bangladesh, China, Pakistan and Turkey recycle 98% of all tonnage in the world, according to the IMO.


BIMCO commissioned a study from Marprof Environmental in February, 2019. The result of the study - ‘Report on the European List of Ship Recycling Facilities’ - is available on the BIMCO website.


Brokers reported the sale of the 1995-built VLCC ‘Super Zearth’ to Indian interests for $380 per ldt on the basis of ‘as is’ Khor Fakkan, gas free for man entry and green recycling.


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May 2019

Nor-Shipping - ballast - remote surveys