At Alang, about 50 km off Bhavnagar in west Gujarat on India's west
coast, the world's biggest graveyard for junk ships is awaiting NaMo's
coronation.
Just like the stock market where traders went crazy and Sensex lost
its sense of gravity, the thriving market for decommissioned ships has reached
stratosphere, with most deals, being struck at over $500 per tonne, more than
30% premium over year-on-year rates.
There is uncertainty over long-term viability of the business and
steel prices (ships are demolished to make steel plates sold in the secondary
market), but a NaMo wave sweeping across the dirty, oily beaches of
Alang-Sosiya is giving confidence to ship breakers.
Buoyed by the strengthening of rupee and improving the prospect of
steel prices in the secondary market, the multi-billion junk ship market is
busy striking deals.
At present, around 80 ships are being demolished at Alang's yards.
Ship breakers believe that BJP's government will ensure a steady improvement in
infrastructure, which, in turn, would help steel prices.
"We are all excited. We look forward to Modi reshaping the Indian
economy. The worst is behind us," says Nitin Kanakia, a ship breaker and
joint secretary of Ship Recycling Industries Association India.
According to him, around 60-65 yards, out of the total 138, are
working at present.
"Prices have shot up from $380-400 per tonne to over $500 in last
12 months," says Kanakia.
Last week, a container ship Messologi (23,740 tonne), controlled by
the Greek shipping giant Danaos, was sold for $515 per tonne, the fourth sale
from the group this year, according to a report by GMS, world's largest trader
of junk ships.
Another ship from Danaos, Mytilini (23,366 tonne), was sold for $509
per tonne two weeks ago. Another Italian owner has committed both their sister
ships (roll-on roll-off) Jolly Verde and Jolly Rosso (both 13,696 tonne)
available at Jebel Ali, for $500 per tonne, with extra payment for bunker oil.
Similarly, PIL of Singapore has sold container ship Kota Wirawan
(6,811 tonne) at $513 per tonne.
Shashank Agrawal, group legal advisor of Singapore-based trader Wirana
Shipping Corporation, told dna that the rupee has already strengthened, and it
is expected to gain further, with higher dollar inflow. "Everyone hopes
that steel prices would increase too, riding the increasing demand amid an
infrastructure push. Demand for old ships will definitely see an
increase," says Agrawal.
Over last few years, yards in Alang have seen several disputes and
court cases related to ownership and possession of ships, and unpaid wages and
dues to suppliers. "Going forward, number of such cases will
increase," says Agrawal.
Kanakia says while the rupee has strengthened, there is no
corresponding increase in steel prices in the secondary market. "Prices
are ruling at Rs 29,500 per tonne, just around Rs 2,000 more year on
year," he said, discussing the non-viability of the business in the
current scenario.
While ship breakers and cash buyers are eagerly looking for the Modi's
magic in New Delhi, not everyone is singing praises of Modi.
"During his days in Gujarat, Modi was also holding the shipping
portfolio. Under his tenure, governance at Alang had seen a steady decline. For
instance, the process of allotting plots on Alang beach had become ad hoc,
leading to corrupt practices. Issues related to safety and pollution are still
given a go-by. In April, four workers from Odisha were crushed to death at the
yard," says Gopal Krishna, convener of NGO Toxics Watch Alliance.
"Over last one decade, Alang has seen more than 200 deaths,
making it the worst among industrial disasters," says Krishna, who is
fighting several battles for workers' justice.
He says the global shipping companies have turned Alang into the most
polluted beach in the world with the complicity of Gujarat and central governments.
"Gautam Adani's group company has proposed to set up a ship recycling yard
at Mundra. Now that Modi has come to power, Adani's proposal, which is awaiting
a final nod from the environment ministry, will soon get a clearance," he
adds.
Source: DNA India. 20 May 2014
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