Hellenic Shipping News – Gujarat: Green shoots visible again as more old ships beach at Alang

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27 April 2016 – Ship recycling activities at Alang in Gujarat’s Bhavnagar district have picked pace in the last three months. Between January and March, a total of 120 old ships beached there — nearly 80 per cent more than the number of ships that visited the yard during the same period in 2015.

“In the last three months of the previous financial year, we have seen a lot of activities. The number of ships that visited Alang during this period is almost the total number of vessels beached here during the first three quarters of 2015-16,” said captain Sudhir Chadha, port officer at Alang, which has the world’s largest stretch of ship breaking beaches.

Only 129 ships beached at Alang for recycling between April 2015 and December 2015, when the business witnessed one of the worst slumps. From January to March 2015, only 67 vessels had come to the yard.

Experts, however, pointed out that business at Alang was far from normal, and said only 249 ships came to the yard during 2015-16 — an eight-year low. Such lows were seen only during the 2006-07 slowdown, when 136 ships visited Alang.

According to shipbreakers at Alang, “poor performance” of the Baltic Dry Index — which measures the rates paid to hire ships of different sizes to transport dry bulk commodities — could be the reason for the rise in influx of ships. The Baltic Dry Index hit an all-time low in February this year.

“The freight market is down, and so it was becoming unviable for ship owners to hold onto their old ships or operate them. Such ships were easily available in the international markets at affordable rates to shipbreakers,” said Haresh Parmar, honorary joint secretary of Ship Recycling Industries Association (SRIA), India.

“However, we at Alang are still struggling. The steel prices continue to remain low, and the infrastructure and real-estate sector continue to underperform,” said Parmar.

The worst months of 2015-16 were October and August when only four and nine ships, respectively, came to be broken. The best month has been February 2016, when 50 ships arrived.

Some shipbreakers felt that the new shipbreaking policy announced by the state government have helped them getting the much-needed finance. The new policy, announced a couple of months after The Indian Express highlighted the plight of the shipbreakers and the dipping business activity, ushered in a number of changes at this yard — the government not only made it flexible for ship-breakers to resize, realign and readjust their plots as per the requirement and size of the ship, it also allowed extension of the plot usage period to as long as 10 years.

The policy also made a crucial decision to link the “recycling charge” imposed by the government on every unit of LDT or light displacement tonnage of ship broken at Alang with the “wholesale price index of steel” for each financial year as released by the office of Economic Advisor, Union Ministry of Commerce and Industry.