Dry bulk ship owners caught between a rock and a hard place:

Ship owners active in the dry bulk market are in some tough predicament these days, as they appear to be caught between a rock and hard place, where the “rock” is the very low freight market rates and the “hard place” is the severe pressure experienced in the steel market, which in turn is negatively affecting the scrap market, i.e. the rates that owners can achieve for selling their older ships for demolition.

In its latest report, shipbroker Intermodal noted that the slowing Chinese GDP growth rate has severely impacted the dry bulk market, especially as it has coincided with the increased supply of dry bulk tonnage. As a result, daily rates for Capesizes are now trading well below the level of $10,000 from over $200,000 in 2008, with the Baltic Capesize Index (BCI) having retreated to a historic low of 311 points, back in January of 2015.

“Hence it comes as no surprise that numerous shipowners consider the demolition market as a possible solution to dispose of old large sized vessels that fail to cover their operating expenses at market’s current levels. But to conclude a perfect storm, the steel market, that is the main driving force behind prices offered by cash buyers and recycling yards for the acquisition of vintage tonnage for demolition, is currently under strong pressure as well. The latter stem from increased exports of cheap Chinese steel that is not absorbed domestically and has flooded the Indian sub-continent. Moreover, prices offered by recycling yards are also negatively affected by the large volume of bulkers that are available to be sold for scrap”, said Mr. Vassilis Logothetis, Intermodal’s Research Analyst.

Logothetis added that “the aforementioned situation has resulted in prices offered nowadays for wet tonnage to range from 210 to 390, depending on the destination, and for dry tonnage from 210 to 370. Just a year ago prices ranged from 310 to 500 for the dry tonnage and 325 to 510 for the wet, a difference of more than 100 dollars per ltd. Nevertheless, the situation in the Dry Bulk market for the Capes is so difficult that we have seen a large number of vessels finding their way to recycling yards even at these low price levels. In May alone, 15 Capes have been sold for scrap, while the same number of Capesize vessels went for scrap during the entire first five months of last year. This is something that generally characterizes the market as demo activity across all segments is higher to the one observed last year”.

He concluded that “at this point in time and given the situation in the Dry Bulk market one should expect the increased trend of vintage bulkers heading for demolition to continue up to the point where the freight market reaches a more viable equilibrium regarding supply and demand of tonnage. Having in mind the large volume of the Dry sector orderbook this will definitely take some time and at the same time it will come as no surprise if current demo price levels slide further. Nonetheless, and despite any additional price softening that could be due, the demo market is expected to continue witnessing healthy activity, as long as the situation in the Dry Bulk market remains tricky”.

Intermodal added that in the demolition market “demolition prices in the Indian subcontinent appear to have stabilized for now, following a month of significant discounts that have left the market with a lower new normal in terms of activity volume and price levels matching the year’s lows back in the beginning of March. Whether the summer season will continue in the same mood is too soon to tell. Breakers in Bangladesh and Pakistan will focus on the outcome of their countries’ respective budgets, both due before the end of the week. Should rumors for increased tax on the industry are announce, this will normally affect both prices and breakers’ appetite to acquire tonnage. On the other hand things in India seem to be slightly better, and this is evident in the presence of sales involving Indian breakers, who now seem a bit encouraged by the revival of both local steel prices and the Indian Rupee. Prices this week for wet tonnage were at around 225-385 $/ldt and dry units received about 210-370 $/ldt.”, the shipbroker concluded.

Source: hellenic shipping news. 5 June 2015

http://www.hellenicshippingnews.com/dry-bulk-ship-owners-caught-between-a-rock-and-a-hard-place/

Worker dies in Chittagong ship breaking yard accident:

A worker died after falling from a scrap ship in a ship breaking yard in Sitakunda upazila of Chittagong yesterday.

The deceased was Saddam Hossen, 22, son of Abdul Sattar of Kakoli village in Manda upazila of Noagaon.

He was working at the Crystal Ship Breaking Yard in South Sonaichari area, Sitakunda police quoted his co-workers as saying.

Saddam was declared dead at Chittagong Medical College Hospital.

Source: the daily star. 7 June 2015

http://www.thedailystar.net/city/worker-dies-ctg-ship-breaking-yard-accident-93400

Shipbreaking—the looming signal:

Concerns voiced over safety and environmental hazards associated with ship-breaking in Bangladesh are not new. The latest that has come is perhaps more strong-worded than ever. It has come from the Norwegian Ship Owners’ Association (NSA). At a recent convention held in Singapore, NSA advised its members not to allow recycling of their ships in Bangladesh, unless it is done in keeping with the Hong Kong International Convention for ‘Safe and Environmentally Sound’ recycling of ships. Reports say, NSA has decided not to export their ships for recycling in Bangladesh, as several earlier attempts to raise the ship-recycling standards in the country did not succeed.

The Norwegian stand appears to be further toughened by a reported move of the European Union (EU), which accounts for 20 per cent of the total scrap vessels sold around the world, to ban export of scrap ships to Bangladesh and other neighbouring countries. Twenty-eight countries under the EU are reported to have prepared a guideline banning export of their ships to the subcontinent — Bangladesh, India and Pakistan.

These, no doubt, are grave signals to reckon with, if the country is to see its ship-breaking industry continue, if not thrive, under the difficult circumstances. The concerns are not just expressions of anxiety as they used to be in the past, but are now clearly action-driven meant to cause a drastic cut in the availability of scrap vessels to be dismantled for recycling.

Given the state of things in the country’s ship-breaking yards, including among others the accidents and deaths due to unsafe conditions, one has to admit that the situation, neglected for decades without any meaningful improvement in work conditions, has by now become too heavy a burden to shoulder. There were repeated moves from various quarters including international bodies and rights groups to raise the standard of work culture in the ship-breaking yards. There are also allegations of ship-breaking companies importing highly toxic foreign vessels despite a ban. Besides, the 2009 court order to ensure workers’ safety and implement environmentally sound practices has not been adhered to. The media and the NGOs have been blaming state regulators — including the department of environment and the ministries of shipping and labour — for failing to protect coastal ecosystems and to monitor these companies’ compliance with safety precautions. Occasionally, there were some stern actions on the part of the law enforces as was seen in the eviction of two breaking yards which were set up by destroying coastal forest in Sitakunda, Chittagong in early February last year.

Of late, however, there are some moves to improve upon the prevailing situation. A work plan for improving health facilities and workers’ safety as well as for managing hazardous waste and addressing the problem of oil pollution under the German-funded partnership project is in the process of implementation. The authorities are also planning to set up a central dumping zone. Upgradation of facilities like fire fighting, cylinder storage and drinking water is also in the process. It will surely take time to see the results. Experts are of the opinion that piecemeal moves are not going to produce desired results. As the entire process involves a whole range of arduous activities, there has to be an integrated plan of actions to address each of those in a cohesive manner.

It is also true that not all the shipbreaking yards are equally lacking in the facilities. There are reports in newspapers that speak of considerable improvements in some of the yards in Sitakunda lately. Some of those were visited by senior foreign diplomats who took a positive note of their standards.

Ship-breaking, no doubt, is highly encouraging for Bangladesh, estimated to be worth around US$2.0 billion. While it offers employment to around three hundred thousand workers, it has the proven capacity for supporting a vast array of heavy and light engineering industries. Iron rods and billets that are recycled from ship scraps, believed to be of high quality, meet a major portion of domestic requirement in the construction sector. Old ships cater for 80 per cent of the demand for raw materials in the rerolling mills. Experts are of the view that Bangladesh is a unique place for ship-breaking and ship-recycling as nearly all the products available from dismantled ships are being used locally. As the advanced countries have given up on ship-breaking in view of the high cost of labour and accompanied compliance issues, ship-breaking has all the prospects to thrive in countries like Bangladesh.

This being the reality, it is indeed a matter of high priority that the stakeholders — mainly the government and the ship-breaking firms – put in their best to ensure that improvement in all critical areas are made visible within the shortest possible time.

Source: hellenic shipping news. 8 June 2015

http://www.hellenicshippingnews.com/ship-breaking-the-looming-signal/

Top 5: Places ships go to die

The top 5 shipbreaking nations have remained the same for almost a decade, with the South Asian nations India, Bangladesh and Pakistan accounting for around 50% of all merchant vessels and cruise ships sold for scrap each year. In these countries, ships are usually run aground at full speed onto heavily polluted beaches where they are stripped of all useable and recyclable parts.

In 2013, the most recent figures available, 1,119 ships were sold for scrap and 92% of them were broken up in these top 5 countries, Arabian Supply Chain.com (the online home of Maritime & Ports Middle East) takes a look at where they went to die.

Source: Arabian supply chain. 9 June 2015

http://www.arabiansupplychain.com/article-11431-top-5-places-ships-go-to-die/

Could Captain John's still live on?

Investors make last-ditch effort to save ship from scrapping

As she sits tied up at a Port Colborne scrapping yard, Captain John’s floating restaurant is yet again drawing a crowd.

A Boston-Miami investor group has offered about $100,000 to save the former Toronto tourist attraction from being cut up into recyclable pieces. And they aren’t alone.

One person has even inquired over what it would take to get the 90-metre ship, the Jadran, a new engine and put it back in business — a $10 million to $15 million proposition.

“I’ve probably talked four or five people out of being interested, just to do them a favour, really,” says veteran ship scrapper Wayne Elliott, who oversaw the towing of the ship from Toronto’s waterfront last month after years of legal battles over its fate.

“We’ve heard from a number of people and with some, it seems to be just emotion and not really well thought-out. Many don’t even have a final plan or a final destination for the ship.”

But some, like Boston-based John Scales, do. And there’s nothing in the contract that Elliott’s Marine Recycling Corporation has with Ports Toronto, Waterfront Toronto and condo developer Cityzen — worth an estimated $500,0000 — that says the ship has to be scrapped.  

Marine Recycling was simply contracted to remove the Jadran from Toronto’s waterfront, where it was a fixture for 40 years.

Scales is part of a three-person group of marine enthusiasts that has been trying to buy the Jadran for more than a year now. It had offered Ports Toronto $3,000 for the rusting ship, largely because of the high costs of moving it to drydock, before adding on the millions needed in restorations.

But now that Elliott’s Marine Recycling Corporation has done the heavy lifting — towing Captain John’s on May 28 to its Port Colborne scrapyard — Scales’ group has upped its price and is more determined than ever to give the ship yet another life, this time as a restaurant or entertainment venue.

The group already had three Ontario waterfront communities and about a dozen in the U.S. express interest in making a home for the ship once it’s restored, says Scales.

The investor group envisions a two-stage restoration — the first to get the three upper decks back in shape as an entertainment venue, the second to find some sort of use for the lower decks, which used to contain sleeping cabins in the days when the Yugoslavian ship was part of a luxury cruise line.

“We already have two good restaurant firms interested in leasing it for five years,” Scales added in a telephone interview after recently driving to Port Colborne from Boston to take yet another look at the ship.

“Captain” John Letnik has already offered to help out, in a bid to save his life’s work from destruction.

“I got as close as I could,” said Scales, of the ship, where crews have had a more challenging time than expected removing all the asbestos. “It’s sitting lower in the water (because of ballast Marine Recycling added to boost its towing stability) and looks longer and leaner.”

Elliott said his office has also had lots of calls from folks looking to buy mementos or artifacts from the ship now that it’s in “the funeral parlour of the shipping industry.”

“Obviously, if something still has good value, it does seem a bit of a shame to scrap it,” said Elliott, who’s been overwhelmed by the unusual outpouring of affection for a ship days away from the end of its life.

“I’m not saying this is a top candidate (for saving from the scrap heap.) My personal belief is likely none of these ideas could work out in time. So we’re carrying on with the next steps in the absence of something that sounds viable.”

Source: the star. 9 June 2015

http://www.thestar.com/business/2015/06/09/could-captain-johns-still-live-on.html