The International Chamber of Shipping has urged owners to scrap more old and obsolete vessels to reduce surplus tonnage. But it also is concerned at environmental and social conditions within the ship-scrapping industry. Chairman Rolf Westfal-Larsen said ships could not go on working forever, and their removal was a necessary part of maintaining fleet quality. 'But ships need to be disposed of safely, and environmental and social conditions in the ship-scrapping facilities, which today are largely concentrated in the Indian sub-continent, tend to be low by international standards,' he said in the chamber's annual review. While shipping and ship scrapping were two separate industries, the chamber's task was to bring about necessary improvements in a way which would satisfy all parties and avoid interrupting the flow of redundant ships to the scrap yards. Mr Westfal-Larsen said his first year as ICS chairman had been full of interest, but for the first time in 15 years, world seaborne trade had fallen slightly last year, after annual rises of about 3 per cent since the mid-1980s. Freight rates had dropped in all sectors, with bulk carriers being the worst hit. In its annual report, shipbroker SSY said dry-bulk shipping rates could recover in the fourth quarter of this year, and rise more sharply next year than had been expected. 'We conclude that the fourth quarter of this year should see the first sustainable signs of a freight market revival with a more fundamental recovery in 2000,' SSY said. It was possible the recovery would be sharper and more pronounced than had been forecast. Demand was likely to rise in parts of the grain sector, SSY said. 'China's grain requirements could lift trade by a few million tonnes,' SSY said, and Iran and Russia could stimulate new demand. SSY warned that the Balkans conflict could have an impact on the summer grain season in Central and Eastern Europe, particularly because river shipping on the Danube was likely to remain at a standstill. New generating plants in Asia also were likely to lift steam coal tonne-mile requirements. The outlook for steel and iron ore trade remained depressed, but rising mainland steel production could increase its need to import iron ore. The fleet supply side also was tightening, SSY said. Scrapping was running at twice the pace of last year, although a slowdown was expected this quarter due to strikes and monsoons. Bulk-carrier deliveries also were slowing and much shipyard capacity would be tied up building tankers and container ships, it said.