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Sub-continent Covid-19 crisis puts squeeze on ship recycling capacity

Photo: Leela Modernized ship recycling facility - Leela yard.png
Shipowners’ recycling options have narrowed dramatically over the last two weeks as the Indian market is now virtually closed for new business and the impact of Covid-19 is increasingly evident in other recycling centres.

All available oxygen supplies in India, including those used by ship recycling yards, have been diverted to hospitals as a significant number of the 218,000 deaths so far are reported to be a result of oxygen shortages. Almost 20 million people have now been infected in India but only about 2% of the population has been vaccinated so far, according to reports. Meanwhile, observers claim that the official death count falls far short of the real number.

Sharp increases in infection rates in neighbouring Bangladesh and Pakistan are hampering recycling activity in those countries too. In this week’s recycling market report, the world’s largest cash buyer of end-of-life ships, GMS, noted that ships’ crews from these countries used in ‘as is’ sales are now barred from many ports around the world, making ‘as is’ deliveries increasingly difficult.

Meanwhile, GMS noted that rising infections in Turkey have prompted the government to introduce a lockdown that will extend until 17 May, the end of the Eid al-Fitr celebrations following the month of Ramadan, which ends on 12 May.

Indicative recycling prices, meanwhile, are holding up, according to GMS, with Bangladeshi breakers leading the market. Prices there are typically around $500 per light displacement ton for bulk carriers, $510 for tankers, and $520 for container ships.

Pakistan recyclers are typically paying $10 less across the board, with Indian facilities theoretically down by a further $10. Corresponding representative prices in Turkey are $250, $255 and $260, GMS said.   

One notable recent sale is that of the 372-metre BW Offshore-owned FPSO, Berge Helene, for a reported $16m, originally built in France in 1976 and converted to an FPSO in Singapore in 2005. The unit has lain idle in Singapore since being demobilised from a Mauritania contract in August 2018.

It will be recycled in full compliance with environmental regulations at the Hong Kong Convention-compliant Priya Blue recycling facility in India. The recycling process will be supervised by Grieg Green, a specialist consultant, and BW Offshore will pay a bonus on satisfactory completion of the project.

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