31 July 2012

Golden Destiny: WEEKLY DEMOLITION MARKET REPORT of WEEK 30 of 2012

Week Ending: 27th July 2012 (Week 30, Report No: 29/12)

In the demolition market, the potential closure of Indian ship recycling industry and the drop in steel prices keeps the scrap price momentum at low levels with some signs of recovery, while currency in India is again loosing ground against dollar. 


Offered prices are now around at $370-$380/ldt for dry/general and $400/ldt wet cargo in the Indian subcontinent region, while China offers levels below $350/ldt for dry/general and about $350/ldt for wet cargo. 

India keeps winning some demo sales for its scrap yards given the uncertainty of the pending Supreme Court ruling in the coming days for banning vessels entering Alang unless any hazardous or toxic wastes had been removed. The court is due to rule on Monday whether the 214,000dwt M/V “ORIENTAL NICETY” (ex-Exxon Valdex) built 1986 would be allowed for disposal in Alang. There are hopes that the Indian shiprecycling industry will remain open and will not face long term closures as Bangladesh with potential stricter regulations imposed.

The week ended with 19 vessels reported to have been headed to the scrap yards of total deadweight 739,621 tons. 

In terms of the reported number of transactions, the demolition activity is down by 10% from previous week’s business with 70% lower dry bulk carrier disposals, while In terms of total deadweight sent for scrap, there has been a decline of 49%, while tankers are holding the lion share, 32% of the total demolition transactions. 

India is on the frontline by winning 9 of the 17 total demolition transactions. In terms of scrap price levels, notable demo deals in the wet and container markets for vessels disposals at levels $422/ldt including bunkers.


At a similar week in 2011, demolition activity was 37% lower than today’s levels, in terms of the reported number of transactions, when 12 vessels had been reported for scrap of total deadweight 557,302 tons with bulk carriers 66% of the total number of vessels sent for disposal. Scrap prices were floating at stronger levels with India offering $525/ldt for dry and $550/ldt for wet cargo, while Bangladesh market was inactive.

Source: GDSA (www.goldendestiny.com). 27 July 2012
http://hiweb.blob.core.windows.net/hellenicshippingnewsbody/pdf/Seasure/wk%2030.pdf

High Court Allows Exxon Valdez to Be Scrapped:


Two judges on India's Supreme Court allowed the ship to move to a shipyard in Gujarat, on the western coast of India.

Bloomberg and TradeWinds News reported July 30 that two judges on India's Supreme Court have allowed the ship once named the Exxon Valdez to be scrapped at a yard in Alang on the country's western coast.


Environmentalists had protested the planned scrapping earlier this year and had won an order from a regional pollution control board barring the ship's owner, Priya Blue Industries Pvt Ltd, from moving it to Alang.


The ship's current name is the Oriental Nicety. It was involved in one of the largest marine oil spills in history in Alaska's Prince William Sound in 1989.

Source: Occupational Health & Safety Online. 31 July 2012
http://ohsonline.com/articles/2012/07/31/high-court-allows-exxon-valdez-to-be-scrapped.aspx?admgarea=news

Indian Shipbreaking industry busy striving to maintain top form:

MUMBAI: Even as there is an ongoing war of words between environmentalists, authorities and trade over entry into Indian waters and subsequent dismantling of some ships which are controversial in nature and content, the country's shipbreaking industry is busy sealing its current position as world's top shipbreaking nation.

In 2011-12 ,India reclaimed its lost position as the world's largest ship-breaking nation with its yards in Alang and elsewhere demolishing 415 ships. According to industry sources, another 150 plus vessels are waiting for their turn at the dismantling units.

While Pakistan emerged as the second largest shipbreaking country, Bangladesh and China took the third and fourth positions, respectively. Though Bangladesh used to filch the top slot in shipbreaking till recently, the industry in the neighbouring country is yet to find its feet as social and political pressures have dislodged its working in full form.

"We do not really know what is happening on the government front about its response to European Union's proposal to change ship recycling regulations ," said a shipbreaker from Alang. "The industry is doing pretty good,thanks to large supply of vessels for breaking.The dollar appreciation against Rupee did not impact much of the business," he added.

However, the trade body that he is a member, Iron Steel Scrap & Shipbreakers Association of India (ISSAI) said that the government has contacted industry stakeholders for their comments on the various changes proposed by the EU.

In its reply to the ministry of steel,which is the focal ministry for ship-breaking in the country, ISSAI said that India should strongly oppose the proposed EU Regulations on export of ships for recycling. 'First and foremost it infringes the sovereign rights of India in controlling an industrial activity on its soil," noted the letter.

It also reminded the government that the industry has always maintained that the IMO Hong Kong Convention on Ship Recycling, which the EU is strongly supporting, eventually intends to do away with the economical 'beaching' method followed by India in ship recycling .

According to local breakers, whether it is EU flagged ships or any other ship dismantled in Indian ship recycling yard, all are subject to local regulations, including Supreme Court directives . Substantial improvements have already been made at Indian facilities.

"The industry is not against improvements. Additional requirements can be made through national laws but not by getting Indian ship recyclers registered with EU," said PS Nagarsheth,president of the association .

"Instead of improving the implementation and monitoring of their regulation, they have proposed the new regulation not to curb the loop holes but to give freedom for non compliance of the present regulation to ship owners. It is a clear attempt to pass responsibility of ship owners /EU citizens to non OECD countries/ship recyclers ," he added.

"They have no right to interfere in sovereign rights of other nations," said Mr Nagarsheth.

"It is a pretty difficult task for the authorities to play the balancing act when it comes to living upto International Conventions even as you play the supporting role to local industries ," was the cryptic reply that a shipping official could give when asked to comment.

Meanwhile, protests and demonstrations voice concerns of environmentalists and organizations against illegal entry into Indian waters or presence of controversial foreign vessels in Indian shores for demolition.

For example, in his letter to over a dozen government authorities , Gopal Krishna, convener of Toxics Watch Alliance (TWA), pointed to the illegal movement of end-of-life US ship Exxon Valdez in Indian waters. The Delhi-based environmental group keeps track, among other things, of corporate crimes and their impact on humans and ecosystem.

"... It is reliably learnt that the hazardous and end-of-life US vessel has got permission to anchor off Bhavnagar from Gujarat Maritime Board on June 28,2012.This vessel is moving to Bhavnagar in the name of inspection by the GMB and Gujarat Pollution Control Board. Its movement must be halted to demonstrate that Indian law enforcement agencies are not subservient to US Ship Disposal Policy."

He said its presence 'off Mumbai is a manifest act of illegality . The violation of Supreme Court's order, international law and the complicit violations of Indian laws and US law is on full display.'

According to him, another hazardous US ship, 'Delaware Trader' has been cleared by the US maritime administration for dismantling in the shipbreaking yards of Alang.

TWA demands that 'Delaware Trader' should not be allowed to enter Indian waters. These ships enter Indian waters and present fait accompli to the law enforcement agencies.

Source: The Economic times. 30 July 2012
http://articles.economictimes.indiatimes.com/2012-07-30/news/32942503_1_ship-owners-shipbreakers-association-indian-ship

India’s Supreme Court Allows Exxon Valdez into Shipbreaking Yard:

On Monday India’s Supreme Court ruled that the Exxon Valdez, a tanker ship responsible for the spilling of millions of gallons of oil in waters off Alaska’s coast, would be allowed entry into an Indian shipbreaking yard.

As part of this ruling the court announced that no ship would be allowed to be dismantled in India without the government’s environmental clearance and the vessel’s decontamination as part of the Basel Convention.

Justice Altamas Kabir and Justice J. Chelameswar ruled on the permitting of the MV Oriental Nicety, formerly the Exxon Valdez, for dismantling at the Alang ship breaking yard in Gujarat.

The ships latest owner, Priya Blue Industries Pvt., a Gujarat based company that purchased the ship with the intent of scrapping it, says the vessel will be transported from its anchorage off the country’s coast to Alang yard where it will take several months to dismantle. According to the court, the removal of toxins will become the responsibility of the ship’s owner.

New Delhi based ToxicsWatch Alliance, who initiated the opposition of the ship’s entry, was disappointed. The group claims the vessel poses environmental threats because of asbestos and heavy metals onboard.

The Exxon Valdez made headlines in 1989 after running aground in Prince William Sound. The tanker spilled an estimated 500,000 barrels of crude oil into the pristine waters, causing one of the most devastating environmental disasters. The incident led to the Oil Pollution Act of 1990, changes to Alaska Hull regulations and opposition to drilling in the area.

ToxicsWatch Alliance believes the vessel its self is hazardous waste, “embedded with asbestos, cables containing PCT, heavy metals, paint chips”, and other materials, all of which is regulated under the Basel Convention.

Source: Maritime Executive. 30 July 2012
http://www.maritime-executive.com/article/india-s-supreme-court-allows-exxon-valdez-into-shipbreaking-yard

29 July 2012

Brownsville, Texas, new shipbreaking location!

This fall, the U.S. Navy will contract three Cold War-era aircraft carriers — the USS Forrestal, the USS Saratoga and the USS Constellation — for scrapping. Often called "supercarriers" owing to their massive size, the ships contain nearly 60,000 tons of steel and other metal each.

All three carriers are likely to be sent to the landlocked city of Brownsville, Texas, to be ripped apart.

The deepwater Port of Brownsville lies inland at the end of a 17-mile channel connecting to the Gulf of Mexico. The long channel provides unparalleled protection from hurricanes and tropical storms.

In the past two decades, the city has become the center of the U.S. ship-recycling industry. Five of the nation's eight recycling companies are here. It's like Home Depot locating right next to Lowe's and Ace Hardware.

Tearing up big ships can be a lucrative business. It's also a messy one. Walk inside a ship that's being scrapped, and you'll find one of the nastiest places imaginable: filthy and rusty, with everything that's poisonous and salvageable torn out.

If it has rained, everything's all wet, too. Brush up against a bulkhead and you can kiss a white shirt goodbye.

But if you're a ship cutter, this is your office, and your cutting torch, your music to work by. Sixty cutters are employed here at Bay Bridge Texas, but even more will be hired soon.

Bay Bridge Texas is the nation's newest ship-recycling yard, says senior Vice President Barry Chambers. The company, backed by Indian investors with deep pockets, just moved to Brownsville from Chesapeake, Va.

Chambers says the infrastructure, the deep water channel and the weather all make the Texas city particularly attractive for his company. But building the yard, he says, still required plenty of work.

"This land did not look like this," Chambers says. "I put in 175,000 cubic yards of fill, leveled and compacted it."

Now, the yard's piers are built to handle ships as large as aircraft carriers. The pilings, made of steel cores, sink 60 feet deep.

From a distance, the tanker ship at the dock looks as though giant Post-It notes have been slapped onto the hull. But those squares are actually holes; the ship's been turned into Swiss cheese for ventilation and light.

Sergio Cazeres, who's been cutting ships since 1992, says the first cuts are made in the side of the ship. "In the hulls, we make cuts so the air can flow in," he says. "If it's too hot then we provide fans."

Recycled ships are typically scrapped from the top down and from front to back. As the steel is harvested, the bow lightens, and powerful winches begin to pull the ship out of the water and up a ramp.

Large white air bags, supporting 250 tons of weight, are rolled underneath.

Chambers says he moved from Virginia to Texas not just for the warm weather and infrastructural perks, but also for the labor pool. He pays between $10 and $13 an hour for the recycling work.

"The Hispanic workforce that I found here is excellent," Chambers says. "It's attitude more than anything. Every day here is different. This is not an assembly line job, and everyday you have to use your wits."


In a nation hungry for working-class jobs, ship recycling is helping to drive Brownsville's economy — even at these relatively low wages. Nearly 1,000 welders scrap 80 percent of the ships recycled in the U.S.

After a ship is dismantled, the metal is shipped to Mexico. Chambers used to send much of his steel to the city of Monterrey in railroad cars — 20 boxcars per train, loaded with 60 tons of steel in each.

But that steel had a market value of 10 to 15 cents per pound. And eventually, the boxcars began showing up in Mexico empty.

Chambers has no idea how the bandits were doing it. "It's unbelievable," he says.

It was no small feat to rip out the steel, Chambers says. "We've even tried welding the steel in there. Then we tried welding bars across the top of it, but it still disappeared."

So now, the steel goes by barge, and the shipments arrive intact. A few months later, they come back into the U.S. as automobile frames, engines and parts to be assembled here.

It's the large availability of ships to be recycled that drives the industry. And as the nation's reserve fleet of aging warships and tankers has become too old to use, those ships are increasingly being sold for scrap.

The price for steel has decreased in recent months with the slowing of the world economy. But that doesn't mean you can't make money breaking ships. Kris Wood, vice president of ESCO Marine, says ships still yield plenty of other valuable elements.

"There's a percentage makeup of nonferrous metals: That's your coppers, your brass, monels that are higher value," Wood says. "So, if the scrap market is down but the ship is still very rich in nonferrous metals, the project can still be a lucrative one."

Back on board at Chambers' yard, the ship cutters remove everything of value — the furniture, the plumbing, the fixtures, the lighting — and sell it. A shopper can get some good deals — if they're open to a nautical theme.

Source: July 25, 2012
http://24hourcampfire.com/ubbthreads/ubbthreads.php/topics/6719603/Re_Brownsville_Texas_new_ship_

MEPC 63 OUTCOME:

On the sixty-third session of the Marine Environment Protection Committee (MEPC 63) that took place from 27 February 2012 to 2 March 2012 the following have been discussed/decided.

MARPOL Annexes I, II, IV, V, and VI amendments have been adopted, aiming to enable Small Islands Developing States to comply with requirements regarding reception facilities for ship waste through regional arrangements. The amendments are expected to enter into force on 1 August 2013.

The NOx Technical Code has been amended to permit separate certification of the diesel engine and the Selective Catalytic Reduction (SCR) System (technology able to comply with Tier III requirements). The amendments are expected to enter into force on 1 August 2013.

Ballast Water Management Convention: three basic approvals and six final approvals were granted to Ballast Water Management Systems using active substances. Currently, the number of systems given final approval by the IMO has increase to twenty-six. Regarding the Ballast Water Management Convention it should be noted that currently 35 countries, representing 27.95% of the world’s merchant shipping tonnage have ratified the Convention. The Ballast Water Management Convention will enter into force 12 months after ratification by 30 states, representing thirty-five percent (35%) of the aggregate global merchant shipping tonnage.

IACS and the International Chamber of Shipping (ICS), submitted a document raising questions about the feasibility of some of the Ballast Water Management Convention requirements, countermeasures have also been discussed. A number of countries have supported the establishment of a framework which would enable the issuance of certificates even before the Convention enters into force.

It was confirmed that Ballast Management Plans approved in accordance with resolutions A.868(20) are also valid.

Regarding e ballast water management technology Japan provided documents on the current installation status of ballast water management systems and proposed that an appropriate review should be conducted based on the understanding that the ballast water management systems are not smoothly installed. As a result, it was agreed to put forward the collection and analysis of the data collected from Member States based on the Japanese proposal.

Regarding Ship Recycling Convention details of guidelines for ship recycling facilities have been examined. Four draft guidelines have been discussed:

1.   “Guidelines for safe and environmentally sound ship recycling”. The guidelines have been adopted
2.   “Guidelines for the authorization of ship recycling facilities”. The guidelines have been adopted
3.   “Guidelines for survey and certification”: Ongoing. To be discussed by the correspondence group and submitted to MEPC 64
4.   “Guidelines for PSC”: Ongoing. To be discussed by the correspondence group and submitted to MEPC 64

IMO is working on Market Based Measures (MBM), such as the introduction of special bunker levies and emissions trading schemes to supplement the technical and operational measures for achieving the GHG emission reductions required by the amended MARPOL Annex VI. In order to narrow down the number of Market Based Measures proposed by member states, the Chairman of the MEPC suggested to carry out assessments of the impact of such measures on developing countries with respect to the implementation of these measures.

Source: officer of the watch. 26 July 2012
http://officerofthewatch.com/2012/07/26/mepc-63-outcome/#more-1281

Cash buyers defend their role in ship demolition:

Biggest players say they are merely middlemen and do not make huge amounts of money

CASH buyers acting as the intermediary between owners and ship recyclers are trying to dispel the myth that they are making huge amounts of money out of selling end-of-life vessels for demolition.

They say they face the same squeeze on finance availability as everyone else in the shipping industry.

At Informa’s annual Ship Recycling conference in London, GMS commercial director Zia Ansari said cash buyers were “not making huge fantastic money” and that the margins were slim.

His comments followed Sea2Cradle managing director Tom Peter Blankestijn asking a cash buyer panel if they could help the push for improved standards at shipbreaking facilities by putting $2 aside for every lightweight tonne they sell that could then be invested into yards.

His argument was that money could easily be built up if, for example on every very large crude carrier sold, cash buyers could put aside $70,000 based on an average 35,000 ldt.

However, Mr Blankestijn, who used to run AP Moller-Maersk’s recycling business and is experienced in the Chinese demolition business, was challenged by Mideast Shipping & Trading general manager Steve Wansell, who asked: “How much exactly do you think cash buyers make on a deal?”

The ex-banker-cum-cash buyer batted back misconceptions that they make a $1mor so on deals, and said on average “it is more like $5 or $6 per ldt”.

GMS trader Jamie Dalzell added that sometimes it could be as low as $1 per ldt or even breakeven, and so it was not possible for cash buyers to build up significant investment funds that alone could change the industry.

The panel pointed to the extreme volatility of demolition rates so far this year as proof that it was difficult to make money at the moment.

A surge in scrapping candidates earlier this year and a combination of financial issues, as well as the onset of the monsoon season, have seen breaker appetite dry up and prices fall $100 per ldt in the last month.

Considering that once cash buyers have purchased a ship from an end owner they then have to re-sell it to a breaking yard, the dramatic drop in prices has seen renegotiations become the norm and some cash buyers have lost money on deals.

All this is happening at a time when there is an increasing volume of ships being marketed for sale for demolition as owners dispose of uneconomic vessels, but there is a limited pool of large cash buyers.

Mr Wansell said that of the 20 cash buyers operating these days, only five or six were large scale, properly structured businesses such as Mideast, GMS and Wirana.

Clarksons’ Darren Lepper asked whether buyers felt the pressure of having to put up large deposits during this busy period, as without cash buyers there would be no recycling.

Mr Dalzell said that GMS was trying to focus its business on vessels purchased on a delivered basis as opposed to as is, because it tied up less cash and meant the company was not blocked from buying more vessels.

Buying a ship on a delivered basis involves the cash buyer paying a 10%-30%deposit to the owner, but the latter then sails the vessel to the shipbreaking destination, where the rest of the money is paid.

By comparison, when a ship is bought on an as is basis, the cash buyer takes ownership of the vessel at a given location—perhaps waters off Singapore or the UAE—and pays the owner 100%. The cash buyer then has to reflag, insure and crew the ship on its last voyage.

“The business model is changing all the time, ”Mr Wansell said, referencing the many moving parts of the business.

Mideast was doing deals with shorter laycans, meaning the period between a sale being committed and the ship being delivered is smaller than in the past, to reduce risk.

“This is not fun and games. The margins are very small in this business and it has become very much about volume.”

Source: By LIZ MCCARTHY. 21 June 2012
http://www.mideast-shipping.com/images/uploads/1341495133.pdf

Fitial actions worry Tinian ship recycling investor:

Gov. Benigno R. Fitial met with U.S. Office of Insular Affairs director Nik Pula and First International Corp. consultant retired U.S. Navy Rear Adm. Christopher Weaver in Washington, D.C. last week on a planned Tinian ship recycling project, but FIC and other local officials are now raising concerns that a contract may be awarded to another firm despite the CNMI government's assurances of support to FIC for months.

Other sources said the administration may favor a Chicago-based company, and not FIC.

The governor won't be back until later this week. The administration said yesterday that this was the first time it became aware of FIC's letter to CNMI officials.

Paul Slater, chairman and chief executive officer of FIC, wrote to CNMI officials on Tuesday, expressing his disappointment and surprise with what transpired last week in Washington, D.C.

That meeting was attended by Fitial, his counsel Jim Stump, Pula, OIA's Keith Aughenbaugh, and Weaver.

“In the meeting of last week at the OIA, representations were made that the CNMI government didn't understand the MOU [memorandum of understanding] and could not agree to something they did not understand,” Slater said.

He said FIC is confused by this position since 1) The MOU has been in CNMI/Commonwealth Ports Authority's hands since March and no objections or questions were brought forward; and 2) The proposed MOU was discussed in the CNMI/Tinian/CPA meetings of June 22 and 23, and agreed to on June 23 by Stump.

Slater said that CPA offered its support for the undertaking but that it lacked the resources to repair the Tinian Harbor.

“FIC seeks clear guidance on CNMI/Tinian/CPA's desires for the way ahead. FIC felt this way ahead was clearly defined as a consequence of the June meetings on Saipan and Tinian, and was disappointed and surprised to be told in last week's meetings that CNMI had questions and reservations regarding the proposal, but intended to issue an RFP for the Tinian harbor repairs and proceed with the work without any agreement with FIC to manage the project or have an operator to run the ship recycling business,” Slater said.

Senate Vice President Jude Hofschneider (R-Tinian), when asked for comment, said all parties need to come to the table once again, given the confusion and shifting positions others may have on the issue.

“The Tinian leadership would like to have that meeting as soon as possible. I believe that's the best thing to do. My understanding was, based on meeting by all parties involved just last month, that the government is entering into an agreement with FIC, unless there's something that already transpired that we can no longer undo,” Hofschneider told Saipan Tribune.

Slater said FIC began working on this ship recycling project in 2010, visiting Guam and then Saipan and Tinian in 2011.

“We met several times with the U.S. Maritime Administration in Washington and succeeded in getting written clarification from the Maritime Administrator David Matsuda in April 2011, that the islands of the CNMI were legislatively approved locations for ship recycling as part of Public Law 110-417-Oct.14, 2008,” he said.

Slater said FIC fully advised the CPA executive director of these facts in response to his March 21, 2011, letter.

“We met with the Office of Insular Affairs in Washington in Feb[ruary] 2012 and discussed funding for the project, having sent them a White Paper fully describing it. We were given to understand that funding for the harbor repairs could be available and we relayed these facts to Gov. Fitial at a meeting during his visit to Washington for the US Governor's conference at the end of Feb[ruary] 2012,” he added.

He also attached an MOU that he said Fitial suggested that FIC submit to the CNMI and CPA after his and Weaver's meeting with the governor in Washington, D.C. in February 2012.

The MOU was submitted to CPA in March, and CPA acknowledged receipt and confirmed that it would be forwarded to the CPA executive director and CPA board.

On April 9, Slater said, FIC was advised that the CPA board had reviewed the MOU and referred it to their legal counsel to draft a response. On April 16, CPA executive director Edward M. Deleon Guerrero wrote a letter, posing no objections to the proposed arrangement and encouraged FIC to pursue business opportunities on Tinian, said Slater.

However, CPA said it has no resources to undertake the repairs to Tinian Harbor that would be prerequisite to introducing a ship recycling industry to the CNMI.

This was discussed in a meeting with Fitial, CPA, Pula, and Tinian leaders on Saipan last month. Slater said Pula confirmed at the time that funding for the harbor repairs was available.

“As a result of these meetings FIC advised the Indian operators that the funding for the harbor repairs was now available and the MOU between FIC and the CNMI/CPA had been agreed. The Indians stated that when the final MOU was signed they would sign an MOU with FIC in the form that they had agreed, and plan on visiting Tinian very soon to finalize all the operating issues,” he added.

Don Farrell from the Tinian Mayor's Office said when Tinian officials left the Senate chamber in June, “we were all under the impression that Governor Fitial was in full support of the project.”

Source: Saipan Tribune. By Haidee V. Eugenio., 26 July 2012
http://www.saipantribune.com/newsstory.aspx?cat=1&newsID=120685

26 July 2012

GMS report on China shipbreaking industry for WEEK 29 of 2012:

A slump in steel prices and demand left an overall grim picture in the Chinese market come the end of the week.

Following the sale of three high spec and voung NYK capesize bulkers over the past two weeks for guaranteed green recycling, a hesitation in offering saw a lull descend over the market.

It is true that capacity is at a premium for some yards, but declining steel prices also left little incentive for end buyers to maintain previous levels as numbers on bulkers began to be quoted in the low USD 300s/LT LDT.

As is the case in Pakistan and elsewhere in the sub continent, only really desired units were being talked of as potential candidates, with a whole raft of available tonnage -many Vietnamese owned, struggling to find any sort of buyer whatsoever.

Source: Steel Guru (sourced from GMS Weekly). 25 July 2012
http://www.steelguru.com/chinese_news/GMS_report_on_China_ship_breaking_industry_for_WEEK_29_2012/275193.html

When The Ship Comes In To Brownsville, Rip it Up

This fall, the U.S. Navy will contract three Cold War-era aircraft carriers — the USS Forrestal, the USS Independence and the USS Constellation — for scrapping. Often called "supercarriers" due to their massive size, each ship contains nearly 60,000 tons of steel and other metal.

All three carriers will be sent to Bay Bridge Texas, LLC, a ship recycling firm near Brownsville, Texas, to be ripped apart.

Tearing up big ships can be a very lucrative business. It's also a messy one. Walk inside a ship that's being scrapped, and you'll find one of the nastiest places imaginable: filthy and rusty, with everything that's poisonous and salvageable torn out.

If it's rained, everything's all wet, too. Brush up against a bulkhead and you can kiss a white shirt goodbye.

But if you're a ship cutter, this is your office, and your cutting torch, your music to work by. Sixty welders are employed here at Bay Bridge Texas so far, but even more will be hired soon.

Bay Bridge Texas is the nation's newest ship recycling yard, says senior vice president Barry Chambers. The company, backed by Indian investors with deep pockets, just moved from to Brownsville from Chesapeake, Va.

An tanker ship waiting to be recycled. Even ships that appear to be in good working condition are valuable as scrap metal
The deepwater Port of Brownsville lies inland at the end of a 17-mile channel connecting to the Gulf of Mexico. The long channel provides unparalleled protection from hurricanes and tropical storms.

In the last two decades, this landlocked city has become the center of the U.S. ship recycling industry. Five of the nation's eight recycling companies are here. It's like Home Depot locating right next to Lowe's and Ace Hardware.

Chambers says the infrastructure, the deep water channel and the weather all make the Texas city particularly attractive for his company. But building the yard, he says, still required plenty of work.

"This land did not look like this," Chambers says. "I put in 175,000 cubic yards of fill, leveled and compacted it."

Now, the yard's piers are built to handle ships as large as air craft carriers. The pilings, made of steel cores, sink 60-feet deep.

From a distance, the tanker ship at the dock looks as though giant Post-It notes have been slapped onto the hull. But those squares are actually holes; the ship's been turned into Swiss cheese for ventilation and light.

A ship cutter scrapping a ship component at the Bay Bridge Texas recycling yard. 
Sergio Cazeres, who's been cutting ships since 1992, says the first cuts are made in the side of the ship. "In the hulls, we make cuts so the air can flow in," he says. "If it's too hot then we provide fans."

Recycled ships are typically scrapped from the top down and from front to back. As the steel is harvested, the bow lightens, and powerful winches begin to pull the ship out of the water and up a ramp.

Large white air bags, supporting 250 tons of weight, are rolled underneath.

Chambers says he moved Bay Bridge Texas from Virginia to Texas not just for the warm weather, but also for the labor pool. He pays between 10 and 13 dollars an hour for the recycling work.

"The Hispanic workforce that I found here is excellent," Chambers says. "It's attitude more than anything. Every day here is different. This is not an assembly line job, and everyday you have to use your wits."

In a nation hungry for working-class jobs, ship recycling is helping to drive Brownsville's economy — even at these relatively low wages. Nearly 1,000 welders scrap 80 percent of the ships recycled in the U.S.

After a ship is dismantled, the metal is shipped to Mexico. Chambers used to send much of his steel to the city of Monterrey in railroad cars — 20 boxcars per train, loaded with 60 tons of steel in each.

But that steel had a market value of 10 to 15 cents per pound. And eventually, the boxcars began showing up in Mexico empty.

Chambers has no idea how the bandits were doing it. "It's unbelievable," he says.

It was no small feat to rip the steel out, Chambers says. "We've even tried welding the steel in there. Then we tried welding bars across the top of it, but it still disappeared."

So now, the steel goes by barge, and the shipments arrive intact. A few months later, they come back into the U.S. as automobile frames, engines and parts to be assembled here.

It's the large availability of ships to be recycled that drives the industry. And as the nation's reserve fleet of aging warships and tankers has become too old to use, those ships are increasingly being sold for scrap.

The price for steel has decreased in recent months with the slowing of the world economy. But that doesn't mean you can't make money breaking ships. Chris Wood, Vice President of ESCO Marine, says ships still yield plenty of other valuable elements.

"There's a percentage makeup of nonferrous metals: That's your coppers, your brass, monels that are higher value," Wood says. "So, if the scrap market is down but the ship is still very rich in non-ferrous metals, the project can still be a lucrative one."

Back on board at Chambers' yard, the ship cutters remove everything of value — the furniture, the plumbing, the fixtures, the lighting — and sell it. A shopper can get some good deals — if they're open to a nautical theme.

Source: NPR. By WADE GOODWYN. 25 July 2012
http://www.npr.org/2012/07/25/156732936/when-the-ship-comes-in-to-brownsville-rip-it-up