Markets - Recycling - Indian sub-continent activity on hold

Jul 12 2019


Bad weather put much of the activity in the sub-continent markets on hold last week, reported GMS.

Bangladesh and Pakistan continued to digest and challenge the latest outcome of their respective budgets and India continued to battle the outcome of its volatile steel plate.

 

However, prices have declined overall by about $50 per LDT from the peaks seen earlier this year and a far quieter summer/monsoon period is subsequently expected across the sub-continent markets, whilst these new realities sink in, GMS said.

 

The flow of tonnage into the market also slowed considerably over the summer months and this has allowed the full Bangladeshi yards, the time to digest much of the large LDT & expensive tonnage beached during the first six months of this year, before returning to buying tonnage in the fourth quarter of the year.

 

In India, steel prices continued to endure a rough ride, once again losing almost $12 per ldt off their value last week, whilst the Pakistani Rupee suffered catastrophic depreciations, wiping about 20% off its value within the last 12 months alone.

 

Even before the impact of the 2019 Pakistani budget, these factors could be taken into account, whereby Gadani Ship Recyclers saw an increase in sales taxes and the PSBA has subsequently challenged the Government for a reversal - albeit, with little success thus far.

 

Notwithstanding, all of their efforts may likely not yield much of a difference, given that their prices are currently positioned some way away from their sub-continent neighbours.

 

Bangladesh meanwhile, seemed better equipped to challenge the recent 10% VAT from its recent budget, with the powerful BSBA lobby already working hard to get this reversed and some signs of progress were reported last week.

 

Finally, Turkey was stuck in a quicksand of domestic distress with little movement to report on local steel plates and the Turkish Lira, which although still weak, displayed some signs of firming as the week ended, GMS concluded.

 

There were a total of 193 ships broken in the second quarter of 2019, the NGO Shipbreaking Platform reported. 

 

Of these, 146 ships were sold to South Asia beaches. Between April and June, Platform sources recorded three accidents that killed at least five workers on the beach of Chittagong, Bangladesh, bringing the total death-toll of the shipbreaking industry this year to at least eight workers.

 

Accident records in Gadani, Pakistan and Alang, India, are extremely difficult to obtain, the NGO said. The Alang local government does not publish any official statistics, and it refuses to provide civil society organisations access to the yards.

 

In Bangladesh, it was revealed that the shipbreaking company BBC Ship Breaking had been fraudulently given the permission by local authorities to wipe out a protected mangrove forest in order to establish a new yard.

 

Following the filing of a complaint by Platform member organisation BELA, the High Court imposed a six months’ stay on the lease contract and have asked the local authorities to explain why they blatantly ignored national forest protection laws.

 

In the second quarter of 2019, Japanese, Saudi Arabian and Greek shipowners sold the most ships to South Asian yards, followed by Indonesian and South Korean owners.

 

The Platform recorded at least two ships that de-registered from an European flag registry prior their last voyage to South Asia in order to circumvent the latest EU legislation. It also claimed that at least five other vessels, owned by Maersk, Chartworld Group, Costamare and Kristian Gerhard Jebsen Skipsrederi, called at EU ports before starting their final voyage towards the shipbreaking beaches.

 

Clearly, more efforts are needed to ensure proper enforcement of current legislation on ship recycling as highest profit seems to be the only decisive factor most shipowners take into account when selling their vessels for breaking, the NGO said.

 



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May 2019

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