It’s important that the India move up the recycling chain for environmental responsibility in order to capture value from a mountain of ships in the container and bulk segment that will need to be recycled and removed from the market in the coming years,.
In India helped by the strengthening of rupee and improving the prospect of steel prices in the secondary market, the multi-billion junk ship market is busy striking deals. At present, around 80 ships are being demolished at Laang’s yards. Industry participants expect that a new government will ensure a steady improvement in infrastructure, which, in turn, would help steel prices.
The EU Ship Recycling Regulation was published and will enter into force on 30 December 2013;. The official text of the Regulation can be found here
Details about the recycling at Along can be found here
While approval to build more capacity at Alang have been slow and beset by environmental concerns The Adani group has had a project proposed involves development of recycling facility adjacent to existing West Port, in Mundra in a project area covers about 40 hectares of reclaimed land created by dumping dredge spoils. The project promotes recycling of approximately 40 ships annually of average Light Displacement Tonnage (LDT) 7582 tonnes. It is estimated that nearly 0.25 million tonne (Mt) per year of scrap metal will be recovered along with 11,000 tonnes per year machinery and 10,000 tonnes per year of miscellaneous items.
The container Ship market continues to be in some distress with a the number of carriers reporting negative results in earnings before interest, taxes, depreciation, and amortization (EBITDA) fell in 2013 when compared with 2012, interest coverage fell to 4.9. That onerous interest burden can be traced to the steady increase in leverage across the industry in the past decade, as carriers have invested in new tonnage capital expenditure grew to $26 billion.
In 2013, carriers damped this course by restraining capital expenditure to $20 billion. Although the container shipping industry has for decades been subject to a vicious cycle of mismatches in supply and demand, this time the cycle has been different: there has been no sustained period of recovery—no seller’s market—in which the carriers could rebuild their finances. The impacts of this prolonged financial stress appear to have been exacerbated by the extraordinary levels of investment required to keep pace with the largest carriers’ order books - See more at: http://www.alixpartners.com/en/Publications/AllArticles/tabid/635/articleType/ArticleView/articleId/1087/Change-on-the-Horizon.aspx#sthash.kPBgkNZf.dpuf
Shipping Banks are no longer active supporting the shipping business through their volatile life cycle- Credit is scarce = perhaps even non-existent - All this has meant that many smaller shipowners who [perhaps have viable businesses are unable to obtain funds to cover routine matters like Drydocking or capital reinvestments for engines etc.
This market presents some great opportunity for secure yield investments in shipping our Ship Finance Company through a specialised vehicle www.tankerpartners.com arranges for Ship Financing based on Residual value Financing to enable vessel owners obtain scare liquidity to manage their businesses. Contact us for more details