Ship-breakers have urged the government to restructure their loans and
set up a special fund to help them overcome what they call “big crisis”.
In a letter to the finance minister, the Bangladesh Ship Breakers
Association said the government should restructure their loans and waive
interest to help them tide over the deeper crisis plaguing the sector in recent
memory.
“Our sector is passing through a great difficulty due to the depression
in the ship-recycling market,” said the letter signed by its president, Md Abu
Taher.
The association president noted that the amount of bank loans secured by
ship-yard owners reached as high as Tk 250 billion (25,000 crore).
The letter said owners are even forced to sell their products at prices
lower than they purchased as banks put pressure to repay loans against import
of scrap vessels.
But prices of scrap ships and billet have started declining sharply in
the international market, which led to the losses as importers bought the
products at higher prices.
The average prices of per tonne of scrap ship and produced rod were
U$480, which fell to U$340 while those of per tonne of billet decreased to
U$325 from U$500, the association said. Per tonne of stored products of the
ships were sold at Tk 42,000 three-months ago, which is now selling at Tk
30,000, it noted.
The situation has resulted in the build-up of inventory, with some 1.5
million tonnes of products remaining unsold. Prices of per tonne rod produced
from ship plates have declined to Tk 37,000 from Tk 48,000 while those of per
tonne of billet dropped from Tk 55,000 to Tk 54,000.
Many owners in the sector are losing their capital and they have stopped
import of scrap ships, according to an entrepreneur.
Some 125 yards were active in the past, but that number has come down to
30-40 now, he said.
During the period from January 2008 to December 2014, Bangladesh
demolished a total of 1,253 ships in the yards on the Sitakunda hub, with an
annual turnover of Tk 40 to 50 billion (4,000-5,000 crore).
Some 147 ships were dismantled weighing 110, 509,9 LDT (light displaced
tonnage) of scrap in the eight months from May to December, 2014.
Source: Hellenic shipping news. 3 August 2015
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