Ban on iron-ore mining to benefit Indian ship breakers

29 Nov 2011

1

Increasing global shipping capacities against a backdrop of weakening in the economy will lead to a surge in ship breaking activity in the next couple of years.

In a new report, rating agency CRISIL said India's ship breakers will acquire a larger market share globally, supported by favourable demand for steel scrap, and limited competition from other markets, including China and Bangladesh.

Trends for India's ship breaking industry, situated at Alang, are counter-cyclical to those for the global shipping industry, it  said.

"Bouts of weak global freight rates make it expensive for ship owners to operate old ships, thus generating a surge in ship breaking activity," the report notes.

Depressed global freight rates since 2009, and high prices for steel scrap have resulted in a spurt in ship breaking.

In 2009 and 2010, the volumes in global ship breaking aggregated around 44 million gross tonnage (GT) - twice the volumes of the four preceding years.

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