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GMS analysis

EU, not much of a market for scrapping

by Port News Editorial Staff

The 34 shipyards on the EU Commission’s list have an insufficient disposal capacity which significantly limits their market potential.

Anil Sharma, founder and CEO of GMS, the largest cash buyer of end-of-life ships, says so in a webinar dedicated to ship dismantling.

GMS points out that EU Regulation 1257/2013 on ship recycling certainly represents a cost for shipowners and leaves them few options for scrapping larger ships including capesize bulkers, very large ore carriers, big tankers and large container ships.

In a nutshell, “The European Union does not have the capacity to recycle this type of unit”. This would result in the success that shipyards in the Far East continue to enjoy, especially those located in Pakistan, India and Bangladesh.

As is well known, the aim of the Community regulation is to establish a regulatory framework for ship dismantling by setting precise standards for environmental protection and worker safety, and to draw up a list of shipyards meeting the minimum requirements laid down by Brussels.

The measure, which applies only to Community vessels, certainly puts a stop to the practice of beaching in the Far East, but it can be easily circumvented, since most of the world’s vessels fly the flag of a nationality which differs from the nationality of the operator who has economic control of the vessel.

GMS states that Pakistan continues to be the most popular destination for ship-breaking.   The Indian subcontinent’s recycling yards are instead working below their capacity, due to the limitations imposed by lockdown measures.

Among the facilities approved by the EU, the Turkish ones are the most important: the six facilities included in the EU white list have been full of orders over the last few months. It is no coincidence that one of the largest cruise companies in the world, Royal Caribbean, has decided to dispose of three of its units in the Turkish region that are being decommissioned. The Monarch, built in 1991 and with a gross tonnage of 73,900 tons, has already been delivered to the Aliaga shipyard in Turkey, while two other units (the Sovereign, class 1987 and the Horizon, class 1990) are currently on their way to the Turkish shipyards.

However, data as of mid-June show that Pakistani yards have significantly increased their scrapping activity, taking delivery of 26 end-of-life ships with a total tonnage of 200,000 tonnes (160% more than the tonnage disposed of in 2019) in the first seven months of the year.

Indian yards have taken delivery of 104 vessels, totalling one million tonnes of sheet metal for disposal. During the same period, Bangladesh’s shipbreaking centres received 80 vessels (1.15 million tonnes).

Translation by Giles Foster

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