Alang set to break highest number of ships in 2009

Even as the shipping companies find it difficult to stay afloat with shrinking export-import business and falling freight rates, the ship breaking industry at Alang in Gujarat seems all set to buck the recessionary trend. About 125 vessels from the international shores are lined up at Alang ship breaking yards as against 40 vessels in the whole of last year.
Mr Vishnu Gupta, President, Alang Ship Breaking Industry Association, said recovery of steel scrap this year was estimated almost double at about 12 lakh tonnes.
“However, breaking charges have fallen to $250-300 a tonne from $600 a tonne last year,” he added.
On an average a ship weighs about 10,000 tonnes to 30,000 tonnes depending upon the capacity.
“Alang is bracing to set a new record by dismantling the highest number of ships in 2009 as more than 600 ships are available for breaking in the international market due to the current economic recession,” said a trader.
Steel scrap prices dip
Reflecting the drop in steel prices, scrap steel realisations have halved to Rs 17,000 a tonne from Rs 34,000 a tonne last year.
The average daily dispatch of plate cuttings from Alang was about 6,500 tonnes a day, sources said.
The rise in availability of scrap steel, which is cost-effective input for rolling mills, may help small mills to reduce rebar prices.
Freight rates fall
The financial crisis across the globe has led to a sharp drop in freight rates in the last six months. The Baltic Dry Index has dipped 91 per cent to 868 from 9,379 in July.
In last two months, freight rates on the India-Europe route have come down to $600 from $800 for a twenty-foot equivalent unit (TEU), while for a forty-foot equivalent unit (FEU), rates have dropped to $1,400 from $1,600. Similarly, rates for the US ports were down to $600 from $900 a TEU.
The new regulations for ship breaking industry to be unveiled by the International Maritime Organisation (IMO) by 2010, is expected to be stringent on environmental impact, pollution, hygiene and labour welfare.
“The sudden rush for dismantling ships can be traced to the fact that the cost may raise many folds once these norms are implemented,” said Mr Vijay Trivedi, Vice-President, Commodity and Trade News.
Moreover, companies had delayed scrapping old ships due to the boom in trade between 2001 and 2006, he added.