Shipbreakers expects less supplies this year amid robust recovery from COVID and a year-over-year trend of lesser new built vessels entering the shipping industry.
Last year, higher number of end-of-life cruise ships and oil tankers headed to scrap yards as travel industry and crude oil transport suffered due to travel bans and the economic slumped induced by the COVID-19 pandemic. With robust recovery and slow but steady resumption of import and export trade, fewer vessels are expected to be scrapped, said shiprecyclers at Alang.
Also, in 2020, new ships orders globally dropped by 66pc from 2019 to 19.24mn compensated gross tonnage (CGT) or 738 vessels, which is a 15-year low, according to Clarkson Research. While the global shipbuilding orderbook to existing fleet ratio is 7.4pc, which is a 31-year low. In 2008, this ratio was more than 50pc indicating a steady decline in shipbuilding orders over the years.
Indian shiprecyclers are confident of completing against global as well as subcontinental players for tonnage with 92 yards compliant with IMO’s Hong Kong Convention (HKC) though it is yet to come into force. Despite HKC compliance, the European Union (EU) has refused to approve recycling of EU and OECD flag carriers at these yards. Fourteen yards in Turkey and one in Chittagong, Bangladesh are also HKC compliant.
According to EU’s Ship Recycling Regulation (EUSRR), which complies with the Basel ban, vessels of EU-based shipowners cannot be recycled at yards not approved by EUSRR. As European scrapped ships constitute less than 5pc of total scrapped ship, these vessels hardly make a difference for yards in the subcontinent, opined shipbreakers, adding that the cost of EUSRR compliance is far higher for the seller as we offer attract prices. Recyclers believe it make little commercial sense to gain EUSRR compliance for such a low share of tonnage.