Bangladesh: New IMO rule boon for local ship breakers

The country's ship scrap market is likely to remain stable for the next few years, as new IMO rule forces hundreds of tankers to go into ship-breaking yards from April 2010, ship breakers said. The International Maritime Organisation (IMO), in its recent assembly held in London approved single hull tanker elimination rule.
A hull is the watetight body of a ship or tanker, above the hull comes the superstructure and deckhouse.
This will ensure adequate supply of MS rod raw material in the country as Bangladesh's steel manufacturers largely depend on the ship scraps to produce the construction material.
"Our sector is expected to remain stable for the next few years as supply side of old ships will improve sharply from April 2010," Captain Mohammed Anam, a senior consultant of Bangladesh Ship Breakers Association (BSBA) told the FE after attending the London conference.
"We will break the large chunk of the old oil tankers to be scraped from May next year as Bangladesh is the number one player in ship scraping in the world," Anam added.
The UN body in its rule said all single hull oil tankers will become unfit after April 2010 as these have been affecting the envirnment to a great extent.
Currently, single hull tankers account for over 800 mostly carrying Greek, Maltese, Librarian, Bahamian and Singaporean flags.
Local ship breakers who supply around 2.0 millon tonnes of scraps each year said prices of used steel materials would only be competitive if vessel supply was ensured.
The ongoing economic recession forced many to scrap their vessels resulting in increased supply of old ships in the Bangladesh's ship breaking yards.
Local ship breakers supplied 2.2 million tonnes of scraps in 2008-09 fiscal year.
The currnet prices for each tonne of non-rollable scrap is Tk 24,000 and rollable Tk 27,000. It reached between Tk 50,000 and 52,000 prior to the global recession.
BSBA presdient Md Zafar Ahmed said: "The IMO rule will be a boon for us and our market will not become volatile any time soon."
The steel market remained stable over the past one year as the ship breakers had supplied adeqaute quantity of scraps to the re-rolling mills.
Curretly, each tonne of quality mild steel rod is being sold between Tk 43,000 and Tk 44,000 against Tk 75,000 and Tk 78,000 earlier.
Bangladesh's around 200 steel and re-rolling mills consume around 70 per cent ship scraps to produce around 2.4 million tonnes MS rod annually.