Financial Express – Ship-breaking industry to grow 10% over 2 yrs: Crisil

30 November 2012 - Mumbai: Indian ship breakers’ global share will grow anywhere between 5-10% in two years as shipping companies replace fuel guzzling older ships with new ones.

Rise in demand for scrap used to make steel and lesser imports from China and Bangladesh will help grow the market share for the largest ship breaking industry with a 35% market share, says a report by rating agency Crisil Ratings India.

“New ships ordered in 2006-08 will be ready for delivery by 2012, and result in expansion in global capacities by more than 25%,” says Gurpreet Chhatwal, director, Crisil.

Ships across the world can now carry 1,050 million gross tonnage (GT). Crisil estimates 180 million GT is more than 20 years old and roughly 55 million GT will be broken by 2014.

The average life span of a ship is anywhere between 20 to 25 years and thereafter, uneconomical ones are broken to scrap in ship breaking yards like Alang in Gujarat.

Bangladesh, which had a market share of 21%, the largest until 2008, is now jostling with uncertainties as breaking ships faces legal restrictions. China, with 25% market share, breaks ships much costlier than India.

Ship breakers purchase ships anywhere between $450-500 a light displacement tonnage or LDT, which is a measure of the amount of steel in the ship. Steel blade and steel scrap makes up anywhere between 80-85% of ship breaking revenue.