China’s shipbreaking volumes grow

London: A recent report from UK broker Clarkson shows that the PRC is taking a far greater share of the ship recycling market, accounting for more than one in five ships recycled in the first half of the year.

“China has an advantage in that its quayside methods of demolition do not attract the same controversy as the beaching methods used in the Indian Subcontinent. In consequence, Chinese demolition volumes have been expanding recently, and recent events in India may open the door to further scrapping in China,” the broker reported.
28.3m dwt of vessels were scrapped in the first half of the year worldwide, already in excess of the total volume in full-year 2010.

“Traditionally, favourable pricing has dictated that the majority of tonnage has headed to beaches in the Subcontinent. In 2011, Bangladesh, India and Pakistan accounted for 67% of global demolition. However, the Chinese market share has risen from 7.7% in 2005 to 21% in the first half of 2012,” Clarkson reported.
China’s market share has grown gradually, as new entrants build a foothold in the market, and as yards have been able to take tonnage positioned in the Far East.

“More recently, Subcontinental scrap prices have slid by $100/t over 1H 2012 and the premium over the Far Eastern prices has closed to almost nothing. This situation has resulted from a decline in Indian steel product prices, combined with a sharp depreciation in the Indian rupee over the last year (of 24% compared to the US dollar). Chinese yards have consequently become more competitive,” Clarkson reported.

In recent weeks, the situation has been clouded further by a court ruling in India which threatens to ban the entry of any ships not complying with the provisions of the Basel Convention on the international movement of hazardous waste. This could affect many vessels.[06/08/12]

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