Regional regulation and national policies are pressing the scrapping market just as demand is set to rise, says Will Tooth of the research and consultancy firm Maritime Strategies International (MSI).
Namely, by December 31 2018, all vessels with an EU member state flag must comply with the EU Ship Recycling Regulation (SRR); the rule that brought the Hong Kong Convention into EU law.
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From 2019, any end-of-life, EU-flagged vessel will need to be scrapped at an approved ship recycling facility, a list which the EU last updated in May. However, currently 21 shipyards are on the list of EU, none of which has experience of breaking large commercial vessels.
MSI said:
As the maritime industry finds itself increasingly faced with legislation designed to tackle the poor condition of current beach scrapping processes, it’s vital for shipbreaking countries to modernise their operations.
In Bangladesh, for example, ship scrapping is an integral part of the economy, as Bangladeshi steel production depends on the scrap removed from ships and around 50% of the raw materials for steel production come from shipbreaking. Nevertheless, there is still a long way to go before Bangladesh is accepted in the EU list of accepted ship recycling facilities.
In addition, the five Indian yards that are already being considered for EU inclusion would add 323,000 LDT of annual capacity, while four others recently applying could contribute a further 300,000 LDT.
The EU must step up its assessment of these yards and ensure that acceptable conditions exist to allow the effective implementation of the Hong Kong Convention.
MSI concluded.
