Recycling International – Indian sub-continent tops shipbreaking league

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16 September 2014 - India: Vessel scrapping volumes were ‘relatively weak’ during last decade’s shipping market boom, with an average of 6.1 million dwt reported recycled per year in the period from 2005 to 2007. However, the global recession contributed to an upturn in demolition volumes and a record 58.4 million dwt was reportedly recycled in 2012, according to Clarkson Research.

Demolition levels ‘remain strong’ and 47.1 million dwt was recycled last year, according to the researcher. In the first seven months of the current year, meanwhile, 21.6 million dwt was reportedly scrapped – quite close to the long-term average of 24.9 million dwt demolished per year in the period from 1996 to 2013.

The majority of vessels have been demolished by shipbreakers in the Indian sub-continent. Scrap yards in India, Bangladesh and Pakistan accounted for over 70% of the tonnage in the first seven months of 2014. In recent years, Indian breakers have typically demolished the largest proportion and handled 30% of global scrap volumes between 2010 and 2013.

‘Currency volatility and political instability saw Indian breakers’ share of demolition fall to 25% last year, but their share is up at 33% in the year to date,’ Clarkson Research reports. In dwt terms, Bangladeshi scrap yards accounted for almost 60% of the demolition volumes between 2005 and 2008, but environmental disputes and competition have limited their activity to 18% of global scrap volumes in the year to date.

Pakistani breakers, meanwhile, have cornered an increasing share of the global demolition market, with their proportion rising from an average of 5% in the 2005-2008 period to 20% in 2013. And in the first seven months of 2014, their scrapping total was reportedly 4.6 million dwt.

‘Chinese scrap facilities have generally been less able to compete on price with breakers in the Indian sub-continent due to the higher labour and yard costs compared to beaching,’ Clarkson Research states. ‘On average, Chinese breakers scrapped 8% of the total tonnage between 2005 and 2008.’

And yet a narrowing of the scrap price differential between the Far East and the Indian sub-continent has helped increase their share of demolition volumes to an average of 21% for the 2009-2013 period, surging to 24% – or 11.2 million dwt – in 2013.