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Article: Ship Recycling: Guidelines for devising a strategy in compliance with complex regulatory framework
News & Insights 19 October 2020
This bulletin aims to assist members with regard to ship recycling, in devising a policy and implementing practical loss prevention measures in line with the complex regulatory landscape.
Ship recycling activity, like any other industry, is dependent on supply and demand. Generally, ships reach their ‘end-of-life’ when their second-hand sale value for further trading drops below their recycling value. This may happen due to the ship’s condition deteriorating with increasing age which may necessitate uneconomical repairs, to the demand for ships being lower than the available supply or to specific regulatory requirements.
On the demand side, the price of steel and the cost of ship-breaking are the most prominent factors. The cost of ship-breaking varies from country to country, depending on labour costs and the types of regulations on workplace safety and the environmental impact that have been implemented in that specific country.
Like most other sectors, Covid-19 has disrupted the ship recycling segment. According to the quarterly updates received from the NGO Shipbreaking Platform, 166 ships were demolished in the first quarter of 2020, which reduced to 98 ships in the second quarter as several recycling yards were closed due to the Covid-19 pandemic. As the restrictions are being gradually eased, operations at the demolition yards are steadily resuming.
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