South Asia dominates the global ship breaking industry. India, Bangladesh and Pakistan, by virtue of their naturally favorable tidal conditions, are able to use the beaching technique for ship breaking which is less capital intensive and hence more cost effective in comparison to the advanced dry dock method. This has enabled these countries to become the preferred ship dismantling destinations. Ship breaking industry plays a very important role in the economies of South Asian countries. The recycling of end-of-life vessels for scrap metal and other materials is a very profitable industry for both ship- owners and the owners of ship breaking yards.

At present, the global center for ship breaking and recycling industry is in South Asia, specifically Bangladesh, India and Pakistan. These three countries account for 70–80 percent of the international recycling market for ocean-going vessels, with China and Turkey covering most of the remaining market. Only about 5 percent of global volume is scrapped outside these five countries.

In 2016, around 936 ships were demolished globally, out of this 863 were demolished in these 5 countries; India topping the list at 319 followed by Bangladesh & Pakistan.

During the period, the total tonnage recovered from ship recycling in India was the highest at 3,201,000 t followed by Bangladesh at 3,100,000 t and Pakistan at 1,677,000 t.

Indian government’s protectionist move like the anti-dumping duty has helped the Indian ship recycling industry greatly, improving the domestic demand and the rise of the ship recycling industry has been slow & steady after couple years of sluggishness.

Present Scenario of India, Bangladesh & Pakistan

The ship breaking industry in India in past one year saw a steady growth; most ship breaking activity is concentrated in Alang and Sosiya yards in Gujarat. According to the annual report of the Union Ministry of Steel, steel scrap generated from ship recycling contributes to around 1% to 2% of India’s domestic steel demand, and is primarily a source of raw material for re-rolling mills. The Indian government approach of protectionist measures & the decreasing Chinese iron ore exports has pushed the demand for ship recycling.


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Gadani Ship breaking Yard in Pakistan is one of the largest in the world. Last year, a total of 141 ships representing over 6 mnt were scrapped in Pakistan, making it the third largest ship breaking nation after Bangladesh and India, according to the NGO Shipbreaking Platform. The number of vessels taken apart by Pakistani ship breakers reached 110 – the industry’s peak – in 2014, reads the International Law and Policy Institute (ILPI) report and this number fell to 81 in 2015. Industry sources put annual steel production, from the breaking of each ship, at 1.2 to 1.5 million tonnes.

Recently, officials in Pakistan have halted the scrapping of oil and LPG tankers at the Gadani Ship breaking Yard, following a string of fatal accidents involving ships of this type. In Pakistan, where dismantling ships within the tidal zone is still the preferred method and the Hong Kong Convention are hardly followed in many of yards, as facilities often lack appropriate safety equipment and emergency services.

The Sitakunda coastal strip northwest of Chittagong, Bangladesh is where beaching started 40 years ago. Together with Alang in India, it is the largest ship breaking site in the world. For Bangladesh, ship breaking is a very important industry. It is reported that the industry accounts for about half of all metal consumed in Bangladesh. Recently, the Bangladesh government’s anti- dumping duty on billets has improved demand for ship breaking plates and the domestic industry is seeing an increased demand for local scarp. On top, Bangladeshi yards recycle on average the world’s largest ships and handle more deadweight tonnage than any other country.

Currently, three-quarters of the shipping tonnage recycled annually occurs on the beaches of India, Bangladesh and Pakistan

Alang: the World’s largest ship recycle rs

Alang on the Bhavnagar coast in Gujarat has attracted ships from developed countries for many decades; it was the best place for the old ships to be demolished. But recently, industry is feeling hemmed in by low Chinese steel prices, scrap oversupply and green production methods and the EU Commission environmental norms. The room for profit was squeezed last year by declining steel prices and the high cost of environment friendly ship breaking methods. Yet, pain will come despite favorable policies of the past three years to encourage higher ship breaking in response to overcapacity and sluggish global trade.

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The steady growing numbers of Ships being broken

Each year, around 1000 large ocean ships reach the end of their service life and are broken down to recover steel and other materials. Alang is known for the highest tidal level (10 meters) in the country and this quality of intertidal zone gets exposed during ebb which makes it possible to accommodate big ships. According to the Gujarat Maritime Board, a total of 415 ships. were dismantled at * Till Feb’17 the Alang. facility, averaging 38.6 million of light displacement tonnage (LDT) against 28.2 mn LDT in 2010 -11.

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Apr 2017_Cover Story_img4The sites located in India are highly favorable as the shipyards offer high tidal ranges, 15-degree slopes and the coastlines are free of mud. As ships do not survive on water for more than thirty years, ship recycling becomes a necessity and the recycled steel is a boon to the steel plants.

Steel 360 spoke to Mr Shanil Pandia of Sagar Laxmi Ship Breakers, a trader from Alang, he said, “the ship breaking industry is picking up as of now as the dollar rates are moving higher, so the scarp buying has improved. He also added that Alang’s infrastructure has improved as they are following the rules laid by the Hong Kong convention (HKC) for the past few years that is the green ship recycling facility in Alang.”

In FY12, the maximum of ship breaking in Alang reached the highest at 415 numbers and in FY13 the number of ships demolished was 394, but in FY14 to FY17 the numbers started to decrease steadily and although Alang has the capacity to recycle 450 ships a year; in FY17 (Apr’16-Feb’17) it drifted to 232. Ever since, the number has been dwindling and only 40-odd out of the total 180 plots are operational in Alang.

SteelMint year-wise data of Alang ship breaking shows steady decrease in demolition over the period of time, but in the coming months of 2017 it is expected to grow.

Is Alang losing out on its Ship Breaking business?

Apr 2017_Cover Story_img5Over 7,000 ships have been broken down since the last 33 years. With slack environmental laws, India was a favorite destination to send ships from all over the world with contaminated and hazardous material for recycling. A couple of years ago, over 350 vessels used to be annually broken at Alang. For more than a year now, there has been a lull on the otherwise busy coastline. Today, there are hardly 80 ships for breaking. Many ship- breaking companies have shut down. The workforce has come down from 30,000 to 18,000. Those who remain, wonder how long they will be there as uncertainty hangs in the air.

They are not the only ones grappling with questions about their future. It also includes scores of people who run ancillary industries that melt the scrapped steel. Many of the 165 or so companies where ships are broken down are empty and many are on the verge of doing so.

Five years ago, the Supreme Court prohibited ships coming for ship breaking from numerous well-off Organization for Economic Co- operation and Development (OECD) countries from entering India’s territorial waters if they had not removed hazardous waste that the Basel Convention (the United Nations Environmental Programme in 1992 adopted the Basel Convention now transposed to EU norms on the control of trans- boundary movement of hazardous wastes and their disposal) had specified.

2016 saw declining steel plate prices, a depreciating currency and demonetization, amongst the key issues which took over the Indian ship breaking industry. The chief concern at the beginning of 2016 was the import of cheap Chinese billets, which had seen market levels more than halve in India and many end buyers subsequently went out of business, unable to repay their ship loans to the banks. In the wake of the credit shortage, plots started to close down and only about 25-30 end buyers were left open to acquire tonnage.

The Positive tide in coming years

However, things did start to get better. The demand for scarp is increasing domestically and the improving domestic Chinese demand greatly reduced exports thereby improving the international recycling market. Moreover, a rebound in Indian steel plate prices and a stabilizing currency saw many Alang buyers get back on their feet, which in turn encouraged banks to ease up on the lending in the end of 2016.

Also in the end of 2016, Denmark’s Maersk Line, the world’s biggest shipping company, without waiting for the forthcoming list of approved facilities outside the EU, sent for scrapping the container ships Maersk Georgia and Maersk Wyoming to India. India has recently applied for the agreement of the European Commission which has planned to publish a 2nd list during the course of 2017. In order to convince the European Union of the quality of its facilities, the State of Gujarat which administers Alang area has called for massive investments to upgrade its beaching recycling plots.

Steel 360 spoke to few more traders to take their comments on ship recyclers in India, Mr Ritesh Agrawal, CEO, Ace Ship Recycling Pvt Ltd said, “the scrap prices are on the increase and ship prices are between USD 300-317; he also added that the dollar increase has not brought much difference to the rates and more focus is on green ship recycling as per HKC.”

As per SteelMint data, a total of 15 ships were reported to have breached at Alang in Feb’17, which has fell 48% against Jan’17. In Jan’17 total 29 ships were berth at Alang for breaking, whereas the number was 25 in Dec’16. It will therefore be interesting to see just how the coming months of 2017 will be for Alang, but it does seem like the worst is over as the industry wraps up 2016 on an overall stable to positive note, with scope for further optimism and improved performance in the year.

Steel 360 spoke to Mr Simos Dimitriou, Senior Trader, GMS Dubai about the present condition of Ship breaking globally, he commented “All across the sub-continent, the prices of ship breaking trading is firm; on other side the charter rates of Bulk ship carrier have increased for example the Panamax container recycle rates have increased tremendously to USD 10,000 per day and few months back it was USD 5000. As the owners are holding their Panamax containers, so fewer large containers go for recycling and less supply for ship breaking, this has led prices to remain firm.”

He also added “Same thing goes for the cape-size ships also which come for recycling, as the owners are holding back the containers, the price of ship breaking has gone up to USD 19,000 to 20,000 per day and in the previous year it was around USD 3000, so less supply of materials & the prices will remain firm. As the monsoon season approaches in the month of May, it will take more time to cut the ship leading to softening of prices. Prices will depend on two factors – Steel prices & demand and during monsoon it will have a downward movement.”

On green ship recycling he added, “There is more activity taking place in green recycling as most of the yards in the Asian subcontinent are following the HKC, to comply for higher standards in the ship breaking yards especially in India. In Bangladesh, there is rise in the local steel prices around USD 40 for the last several weeks and in Pakistan the tankers & LPGs are not sent to their yards till and when they strictly follow the HKC rules due to the recent tragedies.”

Globally, ship owners continued to profit from dangerous and dirty ship breaking practices on South Asian beaches, but in the coming years, the ship breaking yards have to follow the European Union regulations and it has published a list of approved ship recycling facilities worldwide in the end of 2016 and this will satisfy the call from those that demand better practices, including investors. Shipping companies and their investors only allow those vessels to go to yards listed on the EU list.

Ship breaking is slowly failing to become a global challenge and it remains confined in Asia. With the mark of the Hong Kong Convention on ship recycling which was signed in May 2009, its implementation is in process with most of the yards. However, it has become now a focal point calling ship breaking yards in India, Bangladesh & Pakistan to gradually improve sanitary and safety conditions for workers and environmental protection.

BY DR SHEENA ABRAHAM (Inputs from Aameer Sayed )

Source: Steel 360 Magazine Apr’17 Issue