Maritime CEO

China National Shiprecycling Association: Squeezed margins

Beijing: Ship recycling is a counter-cyclical industry if ever there was one, praying on others misfortunes, betting on indices to remain low. Nevertheless, even bad times for shipowners do not necessarily translate into boom times for scrappers in what is a highly cut-throat business. Spare a thought in particular for the Chinese whose greener method of dry docking ancient ships costs more and so naturally gets less business than rivals on the sub-continent.

 
In 2012, the number of ships scrapped in China rose 8.8% , however profitability declined with most recyclers in the red, according to statistics from the China National Shiprecycling Association.
 
“With the continued depression of the global shipping industry, more owners and more shipyards are looking into the recycling industry, however, the shipping industry should recover in next two or three years, which also means difficult times for ship scrapping yards are coming,” Xie Dehua, the association’s president tells Maritime CEO.
 
Beijing has recently enacted legislation to financially encourage local owners to get rid of older tonnage, something Xie is naturally happy about.
 
A recent report by the Shanghai International Research Center showed that more than 70% of owners are keen to scrap parts of their fleet, another good omen for Xie and his members.
 
Part of the problem in China is that, just like shipbuilding, there are now too many ship recycling centres. Latterly this has seen a number of foreign firms from Asia and Europe set up shop in the People’s Republic, something Xie does not wholeheartedly welcome.
 
“Looking at overall capacity, I personally think it is not good that more foreign companies are expanding their ship recycling businesses in China.” He quickly adds, “However, for technology, communication and cooperation, it is a good thing to us.”  [29/05/13]

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