Recycling Markets Hit by Dry Bulk, Boxship Rebound

The supply of tonnage to the recycling markets was down by 20 percent in 2017 amid recovery of the dry and container shipping sectors, according to Clarksons Platou Shipbroking.

However, tough times in the tanker sector have seen owners commit 10.7 million dwt of outdated tonnage to scrapyards. This is four times as much as last year when only 2.5 million dwt of wet tonnage headed to the recycling yards and being one third of the overall 34.0 million total dwt in the market, the shipbroker said.

The Bangladeshi recyclers have emerged as the main importers of tanker units, having acquired the majority of wet tonnage that has been for sale. This, in particular, relates to VLCC/FPSO tonnage with a total of 14 sold for scrap this year, the highest seen since 2013 when 17 headed for the recycling yards.

All 14 ships were acquired by Bangladeshi recyclers.

This was made easier in part as Pakistan still remains unable to import tankers following an incident in January 2017 which killed at least five workers who were working on an LPG carrier that caught fire at Gadani yard.

Due to the tragedy, Pakistan closed its door to tankers and LPG carriers and it is expected that harsher rules on dismantling this type of ships will be introduced once the ban is lifted.

Hence, Pakistani recyclers had to turn to bulkers and containers with Gadani grabbing majority of dry tonnage available on the market.

With respect to other recycling nations, Clarksons said that India continues to progress at an impressive rate in improving the standards of their recycling yards as more green yards are being HKC ratified.

The shift is being facilitated by the country’s government as it switches its focus on implementing green recycling throughout the Alang shoreline with permeable concrete flooring one of the stringent necessities.

Turkey also had a good year having bought a large volume of units across all sectors enabling it to break the USD 300 lightweight tonnage (ldt) ceiling.

“Also as with all yards in Aliaga being fully ratified by the HK convention, it will most likely continue to be an attractive option for owners who wish to sell to green yards and still obtain a strong price, particularly for tonnage completing in the Mediterranean,” the shipbroker said.

China has remained quiet throughout the year and this has meant that several yards have unfortunately closed.

“The end of the subsidies imposed by the government four years ago is coming to an end this year and it will be interesting to see how recyclers react next year and whether they will now start to compete with the Indian subcontinent,” Clarksons added.

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