THE demolition industry in China will not be viable if prices fall below US$150 per light displacement tonne (ldt), the weight of the steel of the ship, says Wah Kwong president Frank Chao. He said he would like to see the price paid for scrapping vessels remain below $140 ldt for the industry to be provide suitable returns for scrappers. Speaking at the Intertanko annual meeting last week, Mr Chao said there also should be better co-ordination between Chinese scrapyards, the construction industry and other downstream businesses which deal with ship breakers. According to a Japanese scrapping study also presented at the Intertanko meeting, a faster pace of tanker demolition may depend on better credit facilities for ship breakers to buy older tonnage. The paper, which was jointly presented by the Japanese Shipowners Association and the Shipbuilders' Association of Japan, suggests that some form of assistance be provided to resolve the problems faced by scrapping firms in purchasing vessels and also problems faced by countries in expanding their scrapping capacity. The joint committee for ship-breaking promotion, which was set up by both associations in April last year, said it was keen to cultivate an understanding of the importance of accelerating ship breaking through collaborating with international organisations such as Intertanko and Intercargo. The joint committee has proposed the provision of technical assistance and information in response to requests from parties engaged in ship scrapping. The assistance would include ship scrapping manuals, technical guidance concerning pollution prevention and work safety, instruction in gas-free technology, acceptance of trainees and lists of brokers handling ships for scrapping. The committee says it would consider various schemes for boosting the supply of ships to be scrapped by paying close attention to developments in the industry that were taking place to eliminate sub-standard vessels to improve safety and protection of the environment. The paper says due to the existence of many vessels that needed scrapping, it was estimated that when these ships reached their physical limits in the latter half of the 1990s, there would be years when ship scrapping volume could be expected to exceed the 20 million gross registered tonne (grt) mark. Moreover, there was a strong possibility that the annual volume of very large crude carrier (VLCC) and other large-sized ships requiring scrapping would surge past the 10 million grt level, it says. While present ship scrapping capacity has been estimated to be about 10 million grt annually, the paper suggests that the potential capacity in the latter half of the 1990s would be between 14 and 26 million grt. The demand for scrapping of small and mdeium-sized ships could be met under present conditions, if more experience was gained and productivity increased, it said. But the task of scrapping of VLCC and other large ships was a more difficult matter, it added. The paper suggests that in order to ensure long-term business stability in the scrapping industry, it was necessary to promote stability in operations, which inevitably required efforts on the part of ship suppliers to try to keep the annual volume of ships to scrapping yards at as uniform a level as possible. In this respect it was vital to accelerate the scrapping of the ageing vessels, it said.
