This has been a rollercoaster year for every industry, and ship recycling was no exception. The first half of the year could be termed as doom and gloom, whereas the second half could be described as hope and opportunity.
A complete lockdown was imposed in Bangladesh in March when all the yards were full of vessels that had been bought at very high prices. For three months, there were hardly any sales and the local price fell very sharply due to non-existent demand for recycled steel, as most of the infrastructure development work in Bangladesh got delayed and, at times, stopped completely. All of the recyclers made huge losses and were stuck with high cost inventories.
After a year like no other, TradeWinds asked 40 shipping industry stakeholders what they see for 2021 after a year beset by the coronavirus, and how the pandemic will shape shipping's future.
The pandemic brought opportunities as well. It hit the shipping industry badly and many vessels were sent for demolition. Suddenly, we found ourselves buying vessels at good prices while the demand for steel domestically has risen remarkably with a sharp increase in the price.
We were able to secure two VLOCs from shipowners who preferred their vessels to be recycled responsibly and, thus, sold only to yards that had statement of compliance with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships.
I am really thankful to owners who are choosing their vessels to be recycled at Hong Kong Convention-compliant yards, as it validates the investment and effort that went to making PHP the first yard in Bangladesh to be awarded with statements of compliance.
Looking ahead, I think 2021 will be a great year as things are easing worldwide and we are hopeful of a Covid-19 vaccine being approved.
The prime minister of Bangladesh has instructed all concerned ministries to restart the infrastructure development projects, which I see as a great opportunity for the demand for steel to increase sharply. This is a good sign and most of the ship recyclers will be busy supporting domestic requirements.
Prices have risen sharply for recycled steel, which has given a lot of hope to the ship recyclers, and there is a huge appetite to buy vessels for demolition. During the pandemic, the financial institutions were put in a tight corner while most of the payments were rescheduled. With government's intervention to restart the infrastructure development projects, there is renewed hope and the financial institutions are willing to help the recyclers to book their tonnage for demolition.
