28 January 2014

GMS weekly report on Indian ship breaking industry for WEEK 04 of 2014:

After a stunning past week, India, like Bangladesh, experienced consecutive days of falls on local steel plate prices by almost USD 10 per LT LDT to leave end buyers, momentarily dazed and fearing for new purchases at recent impressive rates.

There were also some concerns on the currency this week as a previously settled Rupee (around the 61 mark) depreciated worryingly to spend much of the week trading around 62 to almost 63 against the US Dollar.

For this reason, demand started to tail off as end buyers chose to wait and watch market developments before committing on new tonnage. Open end buyers and capacity however, is not an issue as there is plenty of space for new vessels locally.

An older sale of a smaller bulker emerged this week as the CATHAY MORSKI (6,973 LDT) was committed for region USD 430/LT LDT. Currency movements and the scrap steel performance will be key in determining the immediate movement of the market this coming week(s) after the remarkably bullish start to the year.

Source: steel guru. 28 January 2014

GMS weekly report on Bangladesh ship breaking industry for WEEK 04 of 2014:

A number of sales this week at fantastic numbers glossed over what was a declining market this week in Bangladesh. The price of local steel plate declined by almost USD 10 per LT LDT as end buyers began to nervously withdraw offers.

All of this makes the sales of the INFINITE PROSPERITY (13,617 LDT) at USD 472 per LT LDT and the PCTC SINGA ACE (12,226 LDT) at USD 445 per LT LDT ‘as is’ Singapore (with min bunkers) all the more difficult to justify.

The selling points on the INFINTITE PROSPERITY in particular concerned the 250 T bunkers, full spares and added 450 T of steel from a self-discharging system installed by owners in China in 2010. PCC and PCTC units on the other hand tend to be favored in Bangladesh due to the propensity of certain end buyers to re use the decent quality steel to build new coastal trading vessels.

Source: steel guru. 28 January 2014

GMS weekly report on Pakistan ship breaking industry for WEEK 04 of 2014:

The few tankers that were being talked about in the market (both new tonnage being proposed for sale and those already in cash buyer inventories) were largely bypassing the Pakistan market, despite the gas freeing advantage, as prices remained substantially lower than their Indian and Bangladeshi competitors.

Despite an improving demand and decent local fundamentals, Gadani buyers simply could not match the rampant movements of Bangladesh and India (where many end buyers themselves seemed to be taking positions on a bullish future market).

If the supply of vessels slows markedly, then a lack of competitive edge may prove to be detrimental to Pakistani buyers as their quest for new tonnage continues.

Source: steel guru. 28 January 2014

GMS weekly report on China ship breaking industry for WEEK 04 of 2014:

As sub continent markets continued to dominate the recycling scene, Chinese buyers found it increasingly difficult to get their hands on any international tonnage. The supply of state owned, Chinese flagged vessels means they will not be overly concerned by this but clearly prices will need to improve if they are to compete.

Chinese New Year holidays commence this coming week and there has not been the traditional binge on units that usually sees prices surge in an effort to fill yards. Fundamentals remain artificially subdued and there is little optimism that prices will increase after the holidays.

Source: steel guru. 28 January 2014

25 January 2014

GMS weekly report on Bangladesh shipbreaking industry for WEEK 03 of 2014:

With some encouraging gains on the steel prices (at least USD 12/LT LDT) this week the Bangladeshi buyers found themselves keen to compete with a bullish Indian sub continent market especially on units coming from the East.
Some improving demand and numbers therefore emanated from the shorefront as the political situation thankfully and mercifully appears to have settled down in the country post-elections.
A dearth of favored large capsize bulkers and VLCCs and suezmax tankers has seen end buyers adapt displaying an ability to offer on all types of smaller sized units and containers (something that Pakistani buyers have been unable to do).
The one market sale for the week concerned the undertow bulker FORTUNE CLOUD (7,423 LDT), sold ‘as is where is’ for a firm USD 415 per LT LDT with 200 T bunkers ROB. The vessel had been involved in a collision locally and had suffered some damages including ingress of water into some of the cargo holds.
Source: steel guru. 25 January 2014

GMS weekly report on China ship breaking industry for WEEK 03 of 2014:

With Chinese New year holidays just around the corner (commencing 30 th January and finishing 7th February) it was no surprise to see levels in China improve as end buyers looked to stock their yards.
However, with Indian sub continent levels pushing on remarkably this week, Chinese buyers were deprived of any opportunities to pick up international tonnage. What will be of some consolation is the fact the state owners with Chinese flagged tonnage will continue their aggressive scrapping policy this year, off the back of the government subsidies announced late last year something that will see most demo yards receive incentivized vessels and at prices below market.
Source: steel guru. 25 January 2014

GMS weekly report on Pakistan ship breaking industry for WEEK 03 of 2014:

Pakistan buyers were simply interested bystanders as both the Bangladesh and Indian markets surged on further ahead by as much as USD 20 per LT LDT this week. Indeed, it was even difficult for Gadani buyers to compete on tankers (gas free for man entry only) with the premium due for hot works tank cleaning into India or Bangladesh surely now a consideration for ship owners with potential units.
It may only be a matter of time therefore before Pakistan buyers improve their numbers just to be able to compete on available tonnage into the sub continent. Lack of favored tonnage.
The currency remains stable as do steel prices, whilst a proliferation of (undesired) container units continue to hit the market something that may see Pakistani end buyers starved of tonnage, at least for the immediate future.
Source: steel guru. 25 January 2014

GMS weekly report on Indian shipbreaking industry for WEEK 03 of 2014:

A week of (solid) steel price gains and currency stability underpinned some sensational (and perhaps speculative) offerings from cash buyers into India 20 bucks up.
Prices offered surged upwards by USD 20 per LT LDT with all market fundamentals positive as cash buyers competed heavily on the dwindling number of vessels available for sale.
If these heady numbers persist, it may even encourage owners of vessels due for surveys, or nearing the end of charters to book a decent rate and sell. However, if there are lessons to be learnt from the past two years of instability and volatility in the Indian market a comparative downturn in fortunes is never that far away.
Of the vessels committed this week, the smaller general cargo and container types LTI INTEGRITY (4,387 LDT) and FILIPPA C (6,648 LDT) fetched an impressive USD 460 per LT LDT less comms and 445 per LT LDT NETT of comms respectively. The smaller size and beam ensuring a huge array of Alang buyers would have been interested to acquire the units in question.
Additionally, the Russian built RoRo VINNI (10,692 LDT), with excess 2,800 T solid concrete permanent ballast, likewise fetched an enormous USD 470 per LT LDT for green recycling. The decent size, type, and favored Russian build (meaning plenty of non ferrous likely to be on board) are responsible for the excellent price on show.
Source: steel guru. 25 January 2014

Sale Tax drive against 44 shipbreakers launched:

The Federal Board of Revenue has launched a sales tax recovery drive against 44 shipbreakers. Enforcement provisions of the Sales Tax Act, 1990 have been invoked. Sources told Business Recorder on Friday that the Directorate General of Intelligence and Investigation Inland Revenue has provided the list of 44 registered ship breaking companies to the Large Taxpayer Unit (LTU) Karachi and Regional Tax Offices (RTOs) for the recovery of outstanding amount of sales tax.

The FBR has also provided names of shipbreakers, National Tax Numbers (NTNs), names of vessels and sales tax liability to the field formations for compliance. As per instructions of the agency to the LTU/RTOs, the list of 44 registered persons pertaining to the ship breaking sector, against whom sales tax is outstanding has been communicated for appropriate legal action under the Sales Tax Act, 1990 for the recovery of outstanding liability.

In this regard, the directorate has compiled two different lists of the registered shipbreakers. The first list of 44 registered persons is for the period of July 1, 2007 to June 1, 2012. The second list is from June 2, 2012 to December 29, 2012. The data revealed that out of Rs 13.917 billion outstanding amount for the period July 1, 2007 to June 1, 2012; Rs 13.136 billion has been paid by the ship breaking industry whereas the remaining amount of Rs 781 million is yet to be recovered. From June 2, 2012 to December 29, 2012, the balance sales tax liability of the shipbreakers has been worked out to around Rs 2 billion.

When contacted, a tax expert explained that many shipbreakers have allegedly evaded sales tax by not paying due tax as required under the Sales Tax Act, 1990. The procedure for revenue collection from shipbreakers is provided in Special Procedure Rules under which Sales Tax is leviable on breaking of ships instead of release at import stage. The 70.5 percent of the weight (tonnage) of ship/vessel determined at import stage is considered as ship plates. The Sales Tax liability presently is calculated @ Rs 4848 per ton of ship plate. When the ship/vessel is beached for breaking, the Sales Tax determined on the basis of above calculation is deferred and secured against post dated cheques in the concerned RTOs for subsequent encashment/payment of tax. The shipbreakers claim the credit of the payments in their sales tax returns. Reportedly these shipbreakers have not cleared their Sales Tax liability by abusing the self assessment system. The RTOs failed to monitor their liability. The procedural loopholes were abused by shipbreakers thus causing loss to the national exchequer, they added.
Source: business recorder. 25 January 2014

Turning shipbreaking into a safe, green industry:

Shipbreaking industry offers the promise of employing thousands of hitherto jobless workers in Bangladesh. The sector today supports the country's steel, shipbuilding and other heavy and light engineering industries. Some of the recycled materials are exported, and the rest is sold and reused within the country. A lot of the materials are of high value to the local economy. In particular, recycling of steel for producing iron rods for construction, plates for new ships or for many other purposes is a lucrative business. According to a FE report published late last week, Bangladesh emerged as the third largest shipbreaking nation in the world in 2013; in 2012, its ranking was the second.

However, problems regarding safety, health and environmental issues have created a negative image for the industry, despite its positive contribution to job creation in a country with a high rate of disguised and open unemployment. Only the other day, three workers were seriously burnt when fire broke out in a scrap vessel in Sitakunda in Chittagong. Previously, shipbreaking was done in industrial nations, but because of its hazardous nature of operations, it has been shifted to South Asian countries where safety and environmental regulations are more relaxed. About 90 per cent of shipbreaking in the world is done in India, Bangladesh, Pakistan and China.

The shipbreaking industry has, however, great potential in Bangladesh, having one of the longest coastlines. But then there must be adequate safeguards for workers' safety and environmental hazards associated with it. The International Maritime Organisation (IMO) has been trying to implement guidelines/regulations/conventions for qualitative improvement of shipbreaking industry around the globe since 2003. The 'Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships' is one of them. The Hong Kong Convention (HKC) was adopted in May 2009 and will come into force upon fulfilment of some requirements. It is applicable to all merchant ships greater than 500 gross tonnage as well as to all ship-recycling facilities. The European Commission, too, is going to enforce the 'European Regulation on Ship Recycling'. One of the key issues of both regulations, which directly affect the ship recycling industry, is the authorisation of ship-recycling facilities. Many ship recycling yards which are not up to the mark, may be eliminated because of restricted authorisation of ship recycling facilities.

It is still possible to turn ship-breaking into a safe and green industry which is considered a hazardous job. India, Bangladesh and Pakistan account for almost 70 per cent of world shipbreaking in gross tonnage. According to a survey, over 1,00,000 workers are engaged in the ship-reaking industry in Bangladesh. Accident-prone, shipbreaking is still an informal industry, lacking basic amenities. Dialogue among employers, workers and the government is necessary to change the situation. At present, ship-breaking yards in Bangladesh occupy 12.78 kilometre area at Sitakunda while about two nautical miles of sea water have become contaminated by the industry. Shipbreaking should be made a safer and greener industry.  But the South Asian region, as a group, should create a pressure on the developed countries, which build ships, to take the responsibility for permanent disposal of hazardous shipping wastes.

Shipbreaking is definitely going to be affected, in one way or other, by the upcoming regulations. To hold Bangladesh's position in world shipbreaking, there is no other alternative but to comply with the HKC. However, it is not possible to comply with the HKC overnight. The country must upgrade the infrastructure for upstream and downstream waste management, and health and safety issues of the workers before trying to get the approval for facility of the yard. Bangladesh does need to start the process right now; otherwise, it might lose the business of shipbreaking in the near future.

Source: the financial express. 25 January 2014

22 January 2014

Two shipbreaking yard burn victims groaning at CMCH:

Two ship breaking yard burn victims groaning at CMCH

Tapan Jaladas with 38 percent burns, groaning in Chittagong Medical College Hospital yesterday after being injured from a fire ignited by an explosion while cutting a tank at Kabir Steel Ship Breaking Yard in Sitakunda upazila of Chittagong Sunday. His co-worker Md Lalu, not in picture, who also was burnt while trying to douse the blaze, was admitted with 16 percent burns. Workers at the yard alleged that they were not provided with fireproof jackets, something the authorities denied saying that they had given those to all the workers.

Two workers injured in a tank explosion in a shipbreaking yard in Sitakunda upazila of Chittagong on Sunday are now fighting for life in Chittagong Medical College Hospital.

With 16 percent burn injuries, Jaladas, 28, and with 38 percent, Md Lalu, 22, are undergoing treatment at the Burn and Plastic Surgery Unit at the CMCH, said Dr Mrinal Kanti Das.

Tapan's face, chest, left hand and the wrist of right hand were brunt while Lalu's entire face and left hand were burnt, he said.

Tapan, a foreman, was cutting a tank with a gas cutter at Kabir Steel Ship Breaking Yard around 9:30am. All of a sudden, it exploded and Tapan caught fire as there was gas inside the pipe, said Superviser Imran Uddin.

Lalu, while trying to douse the fire, was also caught the fire, he added.

Shridam Jaladas, a fisherman and father of Tapan, hailing from Shitalpur of Sitakunda, said Tapan had been working in the yard for 10 years.

Co-workers held the company responsible for not taking precautionary measures to save them from the accident.

Mokhles, a co-worker and Lalu's cousin, said Lalu of Gabtali in Bogra had been working there for four years.

Co-workers said the two did not wear fireproof dress.

“If they were provided with fireproof jackets during their work, they might have been saved from the burn injuries,” they said.

However, Dulalul Karim, director of the yard, claimed that they have provided all the workers with fireproof jackets.

“Our company is bearing all the expenses of their treatment,” he added.

Source: the daily star. 22 January 2014

21 January 2014

New round of scrapping for Chinese shipping majors:

Beijing: In response to the new ship scrapping policy issued by the Ministry of Transport at the end of 2013, Chinese shipping companies have started a new round of fleet update plans.

China COSCO Holdings announced that it has chosen 41 ships to be scrapped during 2014. Total capacity of the ships is 2.52m dwt. The decision comes after a series of new orders placed by the company lately.

In the meantime, China Shipping Development announced that it will scrap 7 vessels, made up of 2 bulkers and 5 oil tankers totaling 294,000dwt.

“Most of the old vessels are small tonnage vessels and have high fuel cost, but it requires additional cost to scrap them, so the shipping companies just suspended the operation of these ships before the new ship scrapping policy was released, now the companies are more willing to scrap ships and order new ships with the support of subsidies,” an official from China National Shiprecycling Association told SinoShip News.

Source: sino ship news. 20 January 2014

20 January 2014

Hartlepool firm bids to dismantle the Costa Concordia in town:

SHIP recycling firm Able UK is in the running to dismantle the stricken Costa Concordia cruise liner which hit rocks in the Mediterranean.

The firm is one of 12 from across Europe bidding for the contract to dismantle the ship after it is salvaged during the summer.

The cruise ship sank almost two years ago near an Italian island during a seven-day Mediterranean cruise.

The job of importing the wreckage to be scrapped was put out to tender by London Offshore Consultants – three days before the second anniversary of the tragedy.

A spokesman for Able UK, said: “Able UK can confirm that it is in a tender process regarding the potential recycling of the Costa Concordia at its Teesside Environmental Reclamation and Recycling facility (TERRC) at Able Seaton Port in Hartlepool on the River Tees.

“TERRC was of course the yard selected by both the French and US governments to recycle the former French aircraft carrier, Le Clemenceau and vessels from the US MARAD fleet respectively.

“The facility, including one of the world’s largest dry docks, has full planning permissions and environmental accreditations to undertake this type of activity. The previous contracts were completed in October 2010 and employed over 100 personnel.”

The team leading the Costa Concordia salvage operation will begin removing the stricken cruise liner from near the Italian island of Giglio in June.

It is more than 10 years since the former US Navy reserve vessel the Caloosahatchee arrived in Hartlepool, the first of four initial ships to be dismantled by town firm Able UK.

Able had hoped to bring in another nine ships soon and eventually dismantle 167 of the vessels.

By 2008, Able hoped to create more than 1,000 jobs with plans for the 800ft French aircraft carrier Clemenceau to be scrapped in the town.

But campaigners against the ghost ships argued over the environmental effects on Hartlepool, claiming the ships were filled with hazardous material.

Five years of legal and local authority debate followed before Able UK was finally granted a waste management licence in 2008, the permission it needed to dismantle the vessels.

Source: hartlepool mail. 10 January 2014

Despite hard times, Pakistan remains a top ship breaking destination:

PARIS: Pakistan, along with India and Bangladesh, remained the market leaders in global ship breaking, with the subcontinent accounting for more than two-thirds of business, a French monitoring group said on Thursday.

In 2013, 1,119 ships went to the world’s breaker’s yards, a decline of 16 per cent over 2012 which was an “exceptional year,” the environmental watchdog Robin des Bois (Robin Hood) said.

The figures “confirm that the ship demolition sector is in good health,” Robin des Bois said.

It is the second highest tally since 2006, when the group began compiling annual reports in an effort to boost transparency in a sector with a contested environmental record.

In terms of number of ships demolished, the three South Asian countries accounted for 50 per cent of ships torn down in 2013.

India, being the world leader, tore 343 ships, or about 26 per cent of total ships demolished.

Bangladesh and Pakistan stood third and fifth in the list with 210 and 104 ships or 16 and eight per cent respectively.

In terms of tonnage, the three South Asian countries accounted for 71 per cent of the worlds scrapped ships. India came in at the top with 2.8 million tonnes or 31 per cent of total metal recycled globally, while Bangladesh and Pakistan accounted for 2.3 million (25 per cent) and 1.4 million (15 per cent) respectively.

Number of ships demolished in 2013:

India headed the list in both categories, but China was also a big player, ranking second in the number of ships that it demolished and third in terms of tonnage. Pakistan came in fifth (by number of ships) and fourth (by tonnage).

Turkey captured a significant market as it came in fourth by number of ships, tearing down 136 ships (10%) and fifth by tonnage with 514,000 tonnes (six per cent).

Of the 1,119 ships, 667 were scrapped after being held at ports, along with their crew, for failing to meet international safety standards, the report said.

“Port inspections are playing a solid role in cleaning up the world’s merchant fleet,” it said.

Roughly a third of ships that were broken up were bulk carriers, while container ships accounted for one in six – a sharp rise over the last six years.

According to the report, out of 1119 ships that were scrapped in 2013, 387 were bulker, 245 cargo, 180 container ships, 164 containers and 39 Ro Ro.

Environmental concerns

South Asia has long been a graveyard for merchant ships, but it also carries a reputation for poor safety and environmental hazards.

The European Union has approved regulations requiring large EU-flagged vessels to be recycled at approved facilities.

Robin des Bois described the intention as “pious,” given that only eight per cent of such vessels were scrapped at European yards in 2013, and many European ships were given a flag of convenience by their owners for their last voyage.

Source: tribune. 10 January 2014

Revenue leakage: Ship breakers, gold importers face action

The Federal Board of Revenue (FBR) has decided to tighten noose around ship breakers, gold importers and others to plug revenue leakage. The decision was made by Syed Ijaz Hussain Director General, Intelligence and Investigation (I&I), Inland Revenue (IR) during recent visit to Karachi, sources said here on Thursday.

They said the DG I&I had convened a meeting with the officials of Inland Revenue and directed them to expedite the process of tax recovery besides taking appropriate measures to plug revenue leakage. Sources said that DG Ijaz Hussain had ordered field formations to take action against tax evaders in ship breaking industry and gold import.

They said field formations had also been tasked to deal with non-taxpayers, having luxury vehicles and bogus refund claimants with an iron hand. Replying to a question, sources said the I&I, IR, Karachi had so far gone hammer and tongs against unscrupulous elements and remained successful in establishing deterrence.

Sources said investigation in a fake refund case had been initiated by I&I-IR Karachi in April 2012 and since then, the department had identified a colossal revenue loss of Rs 4 billion. They said the department had not only recovered around Rs 2 billion in this case but also averted further revenue loss by blocking fake refunds amounting to Rs 2.7 billion.

Consequently, officials from all three Regional Tax Offices (RTOs) at a meeting with DG I&I-IR avowed that measures taken by I&I-IR, Karachi would ensure upsurge in its revenue collection. The official figures presented by all the three RTOs at a meeting revealed that RTO-I, Karachi has shown 9389 percent growth in its revenue collection.

RTO-I has accumulated Rs 3.047 billion during first quarter of current fiscal year as compared to Rs 32.12 million collected in the corresponding period last year. Similarly, RTO-II has registered 350.94 percent growth generating Rs 5.116 billion against Rs 1.134 billion in previous period. The revenue collection of RTO-III has also increased by 191 percent as it has succeeded in generating Rs 2.81 billion as compared to last Rs 966.56 million.

Source: business recorder. 10 January 2014

Ship demolition market slows in 2013:

Ship demolition activities slowed down in 2013 over the previous year, but the average age of ships getting scrapped is getting younger, according to French environmental watchdog Robin des Bois.

A total of 1,119 ships were demolished in 2013, a decrease of 16% in the number of ships scrapped and 20% in tonnage of metal recycled.

The environmental watchdog also noted that the average age of ships being taken out of service is getting younger at 28 years old in 2013 compared to 31 years old back in 2006.

Robin des Bois further highlighted that the top five shipbreaking countries – India, China, Bangladesh, Turkey, Pakistan – have received 92% of the total number of ships broken up, or 1,029 ships.

“India saved its leadership in terms of units as well as tonnage, ahead of Bangladesh and China, but suffered a fall of 35% in its activity; in 2013, its relative share dropped to 26% compared to 40% in 2012. The other major shipbreaking countries saw a decline of 10% except China where the number of ships delivered in the scrapyards has been higher (+15%),” Robin des Bois said in a statement.

Dry bulk carriers accounted for 35% of the demolition market, followed by general cargo vessels at 22%, containerships at 16%, tankers at 15% and all other vessels at 12%.

Source: sea trade global. 13 January 2014

South Asia takes 71 percent of market for ship breaking:

The world market for ship demolition remains strong, with India, Bangladesh and Pakistan together accounting for more than two-thirds of business, a French monitoring group said on Thursday.

In 2013, 1,119 ships went to the world's breaker's yards, a decline of 16 percent over 2012 which was an "exceptional year," the environmental watchdog Robin des Bois (Robin Hood) said.

The figures "confirm that the ship demolition sector is in good health," Robin des Bois said.

It is the second highest tally since 2006, when the group began compiling annual reports in an effort to boost transparency in a sector with a contested environmental record.

In terms of numbers, the three South Asian countries accounted for 50 percent of ships, but in terms of tonnage, they accounted for 71 percent, Robin des Bois said.

India headed the list in both categories, but China was also a big player, ranking second in the number of ships that it demolished and third in terms of tonnage.

Of the 1,119 ships, 667 were scrapped after being held at ports, along with their crew, for failing to meet international safety standards, the report said.

"Port inspections are playing a solid role in cleaning up the world's merchant fleet," it said.

Roughly a third of ships that were broken up were bulk carriers, while container ships accounted for one in six -- a sharp rise over the last half dozen years.

South Asia has long been a graveyard for merchant ships, but it also carries a reputation for poor safety and environmental hazards.

The European Union has approved regulations requiring large EU-flagged vessels to be recycled at approved facilities.

Robin des Bois described the intention as "pious," given that only eight percent of such vessels were scrapped at European yards in 2013, and many European ships were given a flag of convenience by their owners for their last voyage.

Source: global post. 9 January 2014

Ship owners scrapped the most tankers in a decade during 2013:

It might not strike as a surprise, that among the negative sentiment experienced throughout most of the 2013 year in the tanker segment, owners of those vessels chose to scrap them at a 10-year high pace. According to the latest figures, compiled by shipbroker Gibson in its latest weekly report, during 2013, tanker tonnage sold for demolition last year amounted to 12.6 million tonnes (in deadweight terms), the highest total achieved since 2003.

According to Gibson, "total tanker demolition sales for the year exceeded the 2012 volume by 0.8 million dwt as trading conditions, particularly for the crude tankers, continued to be challenging for most of the year. Lightweight prices remained fairly firm throughout the year and closed December at around $435/lwt tonne (subcontinent), still around $15 higher than the corresponding period last year. Of the 105 tankers ( 25,000 dwt+) sold for scrap, exactly one third were less than 20 years old and importantly 72 vessels were double-hull" the shipbroker noted.

Among the tanker subclasses, 22 VLCCs (average age 18.9 years) were sold for demolition, with hallf the sales concluded in the third quarter. "VLCC tonnage accounted for half of the deadweight total scrapped at 6.4 million. The VLCC DIAMOND JASMINE (281,050 dwt) was just 14 years of age when sold to breakers in June, and the largest tanker sold for disposal was the SEAGULL (310,653 dwt), both to India. There were 11 Suezmax sales, while Aframax/LR2s numbered 28 (average age 21.7 years) accounting for 22% (2.7 million dwt) of all demolition. A small increase in MR/Handysize, up by 4 to 36 over last year, while Panamax/LR1 disposals totalled 8. Once again these numbers reflect the general pattern in the short term expectations of the tanker industry: concern for the crude market and stronger prospects for product tankers. Pakistan once again dominated tanker demolition, taking 6 million dwt (47 units). Bangladesh retained second spot with 2.8 million dwt, followed by India (1.7 million dwt)", Gibson noted.

It went on to add that "the 22 VLCCs sent for breaking last year is the highest number since 2003 when 27 sales were recorded. 2003 was an exceptional year for tanker demolition as the International regulations on the first phase of single-hull disposals became effective the following year. This year should see the removal of the last single-hull tankers. Of the remaining single-hulls, the majority no longer trade in the conventional tanker markets (storage or shuttle duties etc.). However many of these will be removed this year and their duties taken over by the first generation double-hull tonnage. Of course, as always, the worry for the tanker market is the pace that new orders are placed and following the slow start, 2013 saw a massive boom in fresh orders, particularly for product carriers. Although the tanker fleet continues to get younger, we expect more scrapping this year than 2013; there can never be too much recycling to bring about a faster recovery to the tanker market". Gibson concluded.

Meanwhile, in the crude tanker markets this past week, in the Middle East, Gibson said that "a nasty post-Holiday hangover hit hard for VLCC Owners as Charterers sustained discipline over the period built up visible availability, and undermined sentiment, to bring rates back to where they were at the end of October, last, and before the sustained upswing in the lead up to Christmas. Levels now stand at a relatively lowly ws 40 to the East (from a peak of w67.5), and ws 29 to the West (from a peak of w39) via Cape. The next period may well be busier with bargain hunters, but although rates should bottom out, a meaningful improvemennt will take sometime to re-engineer. Suezmaxes stuttered initially, but found strong interest late-week, which, coupled with continued Atlantic strength, to raise the rate-bar to around 130,000 by ws 95 East and ws 57.5 to the West with consolidation likely over the near term. Aframaxes scrapped around, but never found enough to get any real grip, and rates remained stuck at close to 80,000 by ws 115 to Singapore with little early change anticipated".

In the Mediterranean, "as in West Africa, Suezmaxes started a little uncertainly, but quickly had their faith restored by steady, sustained, demand and rates from the Black Sea moved up to 140, 000 by ws 140 to European options, accordingly, with up to a peak of ws 160 seen for a cross Med run, and US$44.5 million paid for Black Sea to Singapore. More of the same for a little while yet. Aframaxes spent the first half of the week in retreat, but then as balance was restored, rates began to move up again to 80,000 by ws 127.5 cross Med, though still a long way short of last week’s ws 15 peak mark. Weather has temporarily improved, freeing up  previously tied up units, so upside potential looks rather limited for now", Gibson noted.

Finally, in the North Sea, "week on week, Aframax rates haven’t materially changed, despite some inter-week fluctuation. 80,000 moves at ws 155 cross UKC with 100,000 by ws 145 the  mark ex Baltic, and ice still not yet a serious consideration - or a rate propellant - for the time being. Suezmaxes couldn’t fail to enjoy continued strength with West Africa and the Med being so buoyant, and rates of 135,000 by ws 115 Transatlantic, and US$ 4.9 million from the Baltic to South Korea were the result, and will continue similar whilst those other areas prosper. VLCCs stayed very thin on the ground, and saw little interest, but rate demands stayed at around US$5.25 million for Rotterdam to Singapore", Gibson concluded.

Source: carbon positive. 14 January 2014

GMS weekly report on China ship breaking industry for WEEK 02 of 2014:

Even as Chinese buyers started to show signs of life, there was little they could do to persuade any market vessels to come their way and elude the clutches of what is an extremely bullish Indian sub continent market at present.

It was little surprise therefore to see no market sales register, and it may be a barren period of time for local recyclers (during what tends to be a generally more successful  period of time for them traditionally) in the build up to Chinese New year holidays at  the end of January.

Nevertheless, the success in snaring the bulk of the Chinese flagged state controlled tonnage for demo should stand them in good stead, regardless of whether they capture their share of the international tonnage, as the largest holidays of the calendar year in China approach.

Source: steel guru. 15 January 2014

GMS weekly report on Pakistan ship breaking industry for WEEK 02 of 2014:

As both India and Bangladeshi markets surged ahead this week, with each securing  market tonnage, Pakistani buyers were left in the shade once again, with numbers  trailing in the wake of their competitors.

It may be due to a lack of favored tonnage as containers remain the vessels of the moment (due to poor charter rates) and buyers tend to avoid them due to draft issues affecting beaching.

Local steel plate prices and the currency remain stable and capacity too remains good, but it may take some more aggression to compete if Pakistani buyers want to secure their share of the tonnage and divert from the hands of their sub-continent neighbors.

Source: steel guru. 15 January 2014

GMS weekly report on Bangladesh ship breaking industry for WEEK 02 of 2014:

As the political situation starts to settle down in the country, local buyers returned to the bidding tables, keen to stock their yards and acquire units once again.

 The ruling party has kept their place in government, and although there is still an  element connected to the opposition party that is seeking to destabilize events (just as  they had in the build up to the election by torching polling stations and taking to the streets), a certain order has been restored to Bangladesh.

 It was in this environment that the Bangladeshi owned handy bulker GREEN OCEAN 1 (8,168 LDT) was committed for a firm USD 430/LT LDT to one keen buyer.

 The demand emanating from local buyers seems to suggest that focus has switched to smaller units for the time, being rather than the favored larger LDT VLCCs and capsize bulkers (even though there is a dearth of such units currently available).

Source: steel guru. 15 January 2014

Ship owners scrap 1,119 ships during 2013 on the back of oversupply issues:

Scrapping of older vessels is still the best bet that ship owners can make, in order to improve their newer vessels' fortunes, amid an oversupply of tonnage, which has plagued most shipping markets over the past couple of years. As such, it can only be deemed a good thing that owners scrapped a total of 1,119 ships over the course of 2013, making it an exceptional year for the ship breaking industry. According to figures compiled by shipbroker Lion Shipbrokers, "the majority of scrapped tonnage was bulkers, followed by general cargo vessels, containers, tankers and passenger-ships, while India held the lion’s share.

The New Year 2014 started positively as breaking yards in Subcontinent are hungry for new tonnage. Local currencies have finally settled down and steel prices have stabilized. Although upcoming elections in February are disturbing the Bangladesh scene, levels and demand remain healthy, with expectations for prices being optimistic, mainly due to the fact that yards remained empty during the last 2 months (due to political instability). Pakistan market remained stable while India is back, securing high profile tonnage (with the local currency being stable against the US dollar). Chinese market is active mainly due the subsidies available to the yards for scrapping Chinese domestic owned tonnage and their renewal of licenses before Chinese New Year holidays", Lion Shipbrokers noted.

Meanwhile, in a separate report, Golden Destiny noted that "2013 ended with scrapping business being at 26% lower levels, in terms of number of vessels, than the historical highs of 2012, but still standing at robust amount as 968 vessels reported to have been headed to the scrap yards with accumulated dwt of more than 44mil tons. During 2012, 1309 vessels reported for disposal at total deadweight of about 61mil tons", the shipbroker said.

It added that "with the opening of New Year, benchmark scrap prices in the Indian subcontinent region are standing at firm levels, with India being the most competitive by offering $410/ldt for dry and $440/ldt for wet. The Indian currency fundamentals and local steel prices are supporting the current high price momentum, while in Bangladesh; the upcoming elections have created confusion and lower activity. In China, prices have picked up by $10/ldt for dry and wet cargo and the recent government incentives for Chinese owners to scrap their vessels locally may boost further the price sentiment during the first quarter of the year".

In total, over the past week, demolition activity was 71% down on the week, with a 70% decrease of dry bulk vessel scrapping and a 60% decline in tanker and container ship scrapping. "In terms of deadweight sent for scrap, there has been 67% weekly decrease with 1 demolition deal reported for large vessel size, 1 panamax bulker. China is reportedly to have won 4 of the 7 demolition transactions, 2 India, 1 Pakistan, while there was no reported activity for Bangladesh. Benchmark scrap prices in the Indian subcontinent region: $400-410/ldt for dry and $430-$440/ldt for wet cargo. Scrap prices in China hover at $340/ldt for dry and $350/ldt for wet cargo. At a similar week in 2013, demolition activity was up by 5%, in terms of the reported number of transactions, when 19 vessels had been reported for scrap of total deadweight 975,406 tons with 9 disposals for bulkers, 1 tanker, 1 liner and 7 containers. Ship-breakers in Indian subcontinent region had been offering similar levels of the current year, $400-410/ldt for dry and $425-$435/ldt for wet cargo", Golden Destiny said.

Finally, according to Intermodal's latest weekly report, it was noted that after the demolition market "pulled back as the year kicked off, it seems that some of the lost ground has now been covered and sentiment has started to strengthen across the Indian Sub-Continent once again. Indian breakers were confident enough to increase their bids on dry units on the back of the Indian Rupee behaving steadily and steel prices settling to levels that provided confidence to local buyers, who manage to snap the majority of vessels reported heading for scrap this week. At the same time, Bangladesh seems to have steadily started coming out of the political unrest as the existing government managed to stay in place after the general elections that took place on the 5th of January, which restored some of the market confidence at least for now. The rest of the market remained quiet with Pakistani and Chinese breakers choosing to sit on the sidelines, while both prices and activity reflected that very lack of interest from end buyers in both countries. Average prices this week for wet tonnage were at around 350-445$/ldt and dry units received about 340-435$/ldt", the Piraeus-based shipbroker said.

Source: carbon positive. Thursday, 16 January 2014 02:00

Bullish start to the year for Indian shipbreaking:

The shipbreaking market in India has turned distinctly bullish in the New Year amidst rising steel prices and a dearth of available ships. Recyclers are looking for junk ships as increasing freight rates force owners to delay scrapping.

In general, 5,000-10,000 ldt units are becoming the preferred range of choice in the world’s largest ship cemetery in Alang due to their lower overall cutting times, shifting the steel off yards and arranging for the import of new units.

“The problem is that freight rates for most sectors (other than perhaps containers) remain firm and the number of available candidates has slowed markedly from the same period last year,” said the Dubai-based GMS, the world’s biggest cash buyer of recycled ships.

“Nevertheless, 2014 is still expected to be a bumper year. Last year saw almost 1,200 vessels scrapped; and whilst 2014 might not emulate that, a huge number of over-aged vessels with SS/DDs due remain and newbuilding orders continue to deliver and outbalance the global fleet size.”

Bearing in mind the extreme fluctuations on both currency and steel prices in India during 2013, end buyers prefer not to hold large, expensive inventories on their plots for too long. As a result, capacity too remained encouraging as almost half of all yards remain empty, with local recyclers abstaining from taking vessels altogether.

Average prices in India rose to $415 per ldt for bulk carriers and to $445 per ldt for tankers. Prices were $5 per ldt cheaper in Bangladesh for both categories, while Pakistani offers were a further $5 per ldt behind.

The sole market sale for the week concerned the older, 5,335 ldt Japanese cement carrier Fujisan Maru, which fetched an impressive $441 per ldt. The smaller ldt would have drawn in plenty of buyers along with the highly valued range of equipment, including cement processing plant, contributing to the decent price on show.

Pakistan found it difficult on the whole to compete with their Indian and Bangladeshi counterparts. This may be due to a lack of their favourite larger-ldt tanker candidates, but at present, end-buyers are lacking the initiative or aggression to compete on market tonnage.

Finally, China has been seeking to acquire vessels from the international market once again in the build-up to Chinese New Year holidays at the end of January. However, with a difference of almost $100 per ldt with India -- $95 per ldt cheaper than India on tankers and $75 per ldt behind on bulkers – the Chinese are unable to compete.

“It would be difficult to persuade owners not to make the journey across (for vessels positioned in the Far East) or for cash buyers to take vessels ‘as is’ with an intention for a final voyage to the Indian sub continent,” GMS remarked.

Source: sea trade global. 17 January 2014