Withdrawal of Indian labour leaves ship scrapping “a guessing game”, says GMS

Indian shipbreakers work at the Alang-Sosiya shipbreaking yard. Credit: SAM PANTHAKY/AFP/Getty Image

With no teams of yard workers to undertake the challenging and perilous operation of disassembling vessels thanks to the coronavirus disease 2019 (COVID-19) lockdown measures, ship scrapping has been on hold for several weeks, with no new vessels being admitted to Indian yards.

In early May, limited teams of workers at India’s Alang facilities, staggered themselves two metres apart in line with social distancing guidelines, and set about cutting vessels that had beached there before the country’s COVID-19 lockdown. However, no new vessels can be admitted at the present time, with “over 20 units still sitting at the outer anchorage in the three Indian Subcontinent locations,” according to consultants Clarksons Platou Hellas, leaving a third of scrapping capacity on hold.

“No new beaching of vessels or inward clearances are being permitted, but the positive stance is that a structured dismantling process is being allowed,” the shipbroker continued.

The world’s largest cash buyer of vessels for scrap, GMS, indicated: “This week, as lockdowns were once again extended at all subcontinent locations until [16 May], the toll on frustrated shipowners and cash buyers has started to tell. At present, there is no way to import fresh vessels into any subcontinent location for recycling, and there are still a number of vessels at various anchorages that have arrived, but have failed to obtain permissions for boardings or beachings.”

India closed its borders completely, even to its own citizens – however, some 15,000 Indians are anticipated to return to the country on Air India flights next week. Official data has the country at 53,000 known cases of the virus with just under 2,000 deaths, at time of writing.

In terms of when personnel will be available for the scrapping market to return to pre-crisis levels – and what the market landscape will be if and when it does – GMS described the situation as a “guessing game”.

“What makes matters confusing is that there is no telling where market prices realistically are at, given that a huge spread of numbers has been seen from recyclers and cash buyers who are essentially speculating on a closed market that is presently much lower than it was at the start of the year,” GMS said. “Currencies have also depreciated alarmingly across the board and it is quite clear that steel plate prices have fallen precipitously as well. As such, until activity fully resumes and steel mills start operating at pace once again, it will essentially remain a guessing game at the moment.”