~By MOHAMMED ZAHIRUL ISLAM RINKU
The year 2020 has been a rollercoaster ride for every industry and ship recycling was no exception. The first half of the year can be termed as a period of doom and gloom whereas the second half can be seen as one of hope and opportunity.
A complete lockdown was imposed in Bangladesh in March and all the yards were full with vessels which were bought at very high prices. There were hardly any sales for three months, and local steel prices fell very sharply due to non-existent demand for the material. All the recyclers made huge losses and were stuck with high-cost inventories.
The short notice of the lockdown meant the workers were unable to return to their villages and had to stay back. We had to ensure their safety. They also had to be paid even though there was no work. We took additional precautions and steps to ensure the workers were in good spirits. We arranged topic-based trainings at site which kept them busy and motivated.
As I have mentioned at the beginning, the pandemic brought in opportunities as well. It hit the shipping industry badly and many vessels were sent for demolition. Suddenly, we found ourselves buying vessels at good prices and we, at PHP Ship Breaking and Recycling Industries Limited (PHP SBRIL), were able to secure two very large ore carriers (VLOCs). The owners of these VLOCs preferred their vessels to be recycled responsibly and thus sold only to yards that had statement of compliance to the Hong Kong Convention. I am really thankful to ship owners who are choosing their vessels to be recycled at Hong Kong Convention-compliant yards. PHP SBRIL is the first yard in Bangladesh to be awarded with the statement of compliance to the Hong Kong Convention.
The demand for steel domestically has risen remarkably with a sharp rise in prices. Looking Ahead
The year 2021 will be a great one as things are easing worldwide and we are hopeful of a vaccine to be approved for Covid-19. Last calendar (2020) was challenging as most of the infrastructure development work got delayed and at times stopped completely due to Covid-19. The steel generated from ship recycling is used for making deformed bars. There was hardly any demand for deformed bars this year but the Prime Minister of Bangladesh has now instructed all concerned ministries to restart infrastructure development projects. I see this as a great opportunity for demand for steel to increase sharply. This is a good sign and most of the ship recyclers will be busy supporting the domestic requirements.
Prices have risen sharply for recycled steel which has given lot of hope to the ship recyclers and there is a huge appetite for buying vessels for demolition.
During the pandemic, the financial institutions were put in a tight corner as well as most of the payments were rescheduled. With the government’s intervention in helping restart infrastructure development projects, there is renewed hope and the financial institutions are willing to help the recyclers book their tonnage for recycling.
The author is Managing Director, PHP Ship Breaking and Recycling Industries Limited, Bangladesh.
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