The Indian domestic shipbreaking industry is expected to see 10 percent growth year on year in revenue earnings in the current fiscal year 2020-21, riding on improved arrivals of condemned vessels and high international ferrous scrap prices, a report from Indian rating agency Crisil said on Tuesday, March 16.
According to the report, a fall in global trade as an impact of the Covid-19 pandemic weighed on sea freight, hurting the viability of shippers and making more vessels available for dismantling at lower rates. Consequently, as of the second quarter starting June 2020, there was a sharp rise in the number of vessels arriving in India for breaking compared to the muted activity in the first quarter of the year.
Furthermore, India has enacted the Recycling of Ships Act 2019 and has joined the Hong Kong International Convention (HKC) which sets standards for ship recycling, enabling India to consolidate its leadership position in shipbreaking globally, the report said.
The procurement price for vessels to be condemned and dismantled was down by more than $75/mt to about $320/mt over the first six months of the current fiscal year compared to the previous period, thereby increasing the viability of domestic shipbreaking operations, Crisil said.
Indian shipbreakers are set to procure between 230-240 vessels with a combined weight of 1.9 million light displacement tonnage (ltd) this fiscal year, compared to 214 vessels with a combined weight of 1.77 million ldt bought in the previous fiscal year.
India has about 150 shipbreaking yards of which 90 are HKC-certified, giving the country an edge over its closest competitors in Bangladesh and Pakistan which have not signed the HKC, the Crisil report said, adding that the three countries together account of 75 percent of shipbreaking globally.