Lloyd’s List – Scrap market at odds over Indian Supreme Court move

(Written by Brian Reyes)

16 July 2012 - Directive threatens to remove world’s largest recycling centre from demolition market

INDIA’S Supreme Court tightened the environmental standards applied to the country’s shipbreaking industry last week, raising fears that the move could temporarily shut down the Alang market.

The court directive seeks to apply the Basel Convention to the shipbreaking sector, restricting the importation of ships containing toxic or hazardous materials as defined in that agreement.

In practice, that could place the onus on shipowners not just to prepare an inventory of hazardous materials prior to delivery, but actually to remove them too.

The court’s decision raised uncertainty about the future of Alang’s shipbreaking sector just as rates had begun to rise again after plummeting $100 per ldt in little more than a month.

“For many, it feels like a case of one step forward and two steps back, as rather than having a fully fit and functioning Indian market back on the positive scene to buy once again, we could be faced with having no market at all,” said US-based cash buyer GMS.

“What needs to be understood and discussed is what exactly the Indian Supreme Court is looking to outline with this new legislation.

“Hazardous materials inventories already exist for all vessels coming into Alang and have done for some time now, in acquiescence with the Hong Kong convention.

“But if owners are actually going to be required to remove these items, then we move into very tricky territory indeed.”

Although the news dampened interest from buyers last week, the impact on the ground has so far been negligible.

London-based Clarkson Research Service said the announcement led to some initial panic among the Alang shipbreaking fraternity, but this had been short-lived, as tonnage that arrived after the circular was issued was granted the relevant permission to beach.

The year-long closure of the Bangladesh market in 2011 over environmental concerns is still fresh on people’s minds, but most in the sector feel a similar situation in Alang would be infeasible.

All eyes are now on the outcome of a court hearing later this week that will have to consider how the directive should be applied, alongside the environmental aims of the move against its impact on a crucial area of economic activity.

There were just two sales reported last week into India.