Tuesday, March 24, 2009
Tuesday, 24 March 2009
Last week’s decision of a court in Bangladesh, one of the most important ship recycling centers worldwide, to direct the governement to shutdown the operations of all local ship breaking yards within a period of just two weeks has reaped havoc among the industry and serious concern among ship owners across the board, eager to sell their older tonnage for scrap. The court order was obtained by the Bangladesh Environmental Lawyers Association (BELA), whilst no one was representing the ship recyclers and the industry. The latter responded by labelling the action as “exploitation of law and miscarriage of justice”. The above illustrates the very precarious position of the industry in the sub?continent.
According to GMS’ latest weekly report, “extremely well funded and organized camps have the ability to suddenly change the dynamics of the industry by bringing unilateral and arbitrary action, while the players are side?tracked by intense market activity and nonchalance towards the agendas of groups determined to stop ship recycling activities in the Indian subcontinent. Consequently, the fate of this industry continues to be mauled by unexpected turns that rock the very foundations of its existence. We do hope that this week’s ruling serves as a rude “wakeup call” to all those that make their living from this industry, yet do not make any contributions to improve and participate in the development of this industry. For those who are truly interested in “giving back” to the industry and do care for the industry’s survival, growth and enhancement, the recently launched Green Ship Recycling Association (GSRA) serves as an ideal platform” said the researchers.
But, as all this goes on, vessels destined for Chittagong may face delays, since until further reviews the Director General of Shipping had stopped issuing the No Objection Certificate (NOC) required to import vessels in to Bangladesh. Meanwhile, Indian counterparts appear more nervous than ever before, something which was reflected in demolition prices, already showing signs of softening on the back of falling steel prices. GMS pointed out that Indian recyclers “feel that the unexpected increase in availability of tonnage and lack of competition will have a greater downward pressure on prices. Consequently, the magical USD300/ton benchmark plummeted”. As a result and until some course of action against the potential of another round of catastrophic losses is decided, several deals are undergoing delays and renegotiations. It all points out to the fact that demolition prices seem to have climaxed and are now on the way down.