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Alang ship-breaking yard flourished in slowdown

Alang ship-breaking yard flourished in slowdown
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First Published: Thu, Apr 08 2010. 12 30 AM IST

Scrap business: A file photo of an Alang ship-breaking yard. Globally, ship demolition rose to a 13-year high in 2009. Vikas Khot / Hindustan Times
Scrap business: A file photo of an Alang ship-breaking yard. Globally, ship demolition rose to a 13-year high in 2009. Vikas Khot / Hindustan Times
Updated: Thu, Apr 08 2010. 10 18 AM IST
Bangalore: The world’s biggest ship-breaking yard in Alang, Gujarat, saw its best year in a decade in 2009-10 as a slowdown in global trade forced international fleet owners to retire ageing ships faster.
In the year ended 31 March, the Alang yard dismantled 348 ships, the same as it did in 1997, said Vishnu Kumar Gupta, president of the Ship Recycling Industries Association of India. The highest number of demolitions at Alang was in 1999, when the yard broke 361 ships.
In 2008-09, the yard dismantled 264 ships.
Scrap business: A file photo of an Alang ship-breaking yard. Globally, ship demolition rose to a 13-year high in 2009. Vikas Khot / Hindustan Times
Globally, ship demolition rose to its highest in 13 years between January 2009 and December, as owners scrapped ageing vessels to make way for a record number of new ships being built, London-based Clarkson Research Services Ltd said in a March report.
Scrappers in Bangladesh, India, Pakistan and elsewhere bought 1,014 ships with a combined cargo-carrying capacity of 31.5 million deadweight tonnes, said Clarkson Research, a unit of the world’s biggest shipbroker, London-based Clarkson Plc. That’s double the 2008 tally and the most since 1996, it said.
India, Bangladesh, Pakistan and China carry out 80% of the world’s ship-breaking business.
Charter rates for commodity carriers as measured by the Baltic Dry Index plunged 59% to an average 2,617 points last year as the global recession curtailed demand for raw materials, according to the London-based Baltic Exchange. Crude oil tanker costs lost 62%, averaging 581 points, according to the exchange.
The biggest component of the demolitions last year was commodity carriers, with 10 million tonnes (mt) of capacity removed, Clarkson said. Oil tankers accounted for 8.4 mt and the remainder was split across different vessel types.
Indian scrappers bought the most vessels for demolition (393 ships) between January 2009 and December, while Bangladeshi yards accounted for the biggest slice of carrying capacity, at 10.3 mt, according to Clarkson Research.
The growth in ship-breaking at Alang was also due to the accumulated supply of ships in the last three years, said Pravin Nagarsheth, president of the Iron, Steel, Scrap and Shipbreakers Association of India.
Nagarsheth is not sure how long the boom will last. “It remains to be seen whether this kind of growth can be sustained in future,” he said. “Ship-breaking industry is totally dependant on re-rollable scrap for its existence.”
But with India’s steel production growing at a faster clip and given customers’ preference for quality steel, the demand for re-rollable scrap was diminishing. “This was exerting a heavy pressure on the price of re-rollable scrap,” Nagarsheth said.
A new global convention on ship-breaking is also causing worry. Breakers have urged the government to reject the new convention as it would replace the “beaching method” used in India for ship-breaking. Under this, ships are first grounded and then dismantled.
The new international convention for the safe and environmentally sound recycling of ships, adopted by the International Maritime Organization, wants ships to be dismantled by the dry-docking method.
A dry dock is a narrow basin that can be flooded to allow a ship to be floated in, then drained to allow that ship to come to rest on a dry platform. Dry docks are used for the construction, maintenance and repair of ships.
“This method of ship-breaking is not economically viable because constructing dry docks involves a few thousand crore (rupees),” Nagarsheth said. “If this method is adopted, India will have to close down its ship-breaking facilities.”
The code, adopted in Hong Kong last year, has to be ratified by at least 15 maritime nations before it can come into force.
p.manoj@livemint.com
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First Published: Thu, Apr 08 2010. 12 30 AM IST