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Ship recycling market strengthens following Chinese New Year pause

Photo: Leela Modernized ship recycling facility - Leela yard.png
The February lull evident across ship recycling markets is coming to an end amid firmer prices for steel plate, spurred by an upturn in purchases from Chinese steel mills.

Bangladeshi recyclers are leading the market, buying four very large ore carriers plus a number of panamax and handy bulkers for beaching, taking its tally to more than 200,000 light displacement tons in about a month, according to GMS, the world’s largest cash buyer of end-of-life ships.

Recyclers there are typically paying prices of $450 per ldt for container ships, $440 for tankers, and $430 for bulk carriers. Facilities in Pakistan are paying about five dollars less across the board while Indian prices typically show a further five dollar discount, GMS said in its market briefing this morning. 

The volume of tonnage available for recycling could well increase in the months ahead. Both the tanker and offshore sectors are weak, GMS noted, and vessels facing special survey and the imminent installation of ballast water treatment systems could well prove likely recycling candidates.

Meanwhile, owners also face the impact of IMO decarbonisation measures relating to existing ships. The energy efficiency existing ship index (EEXI) and the carbon intensity indicator (CII) were approved at last November’s MEPC meeting and are likely to enter force from January 2023.

Experts have estimated that around three quarters of existing ships will be affected by these new regulations, with older vessels in particular requiring possible modifications. 

Looking to Turkey, where prevailing prices are about $200 less per ldt, a man involved in the recycling of a Carnival Corp cruise ship died earlier this month at the EU-approved Simsekler Ship Recycling Yard in Aliaga. The man was not working directly on the vessel when the accident happened, the shipyard said.

The incident follows another fatality in Turkey at the EU-approved Isiksan recycling yard last October when a worker died whilst working on the dismantling of a Transocean offshore rig.

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