Seatrade-Maritime: Regulatory delays reduce Indian recycling capacity by more than 50%

Published by Seatrade-Maritime

Rakesh Khetan, CEO of Wirana Shipping, one of the world’s largest cash buyers of ships destined for recycling, has called for swift action by designated Competent Authorities in India to enable the appropriate documentation to be made available as soon as possible.

Ship recyclers are facing hold-ups in procuring Documents of Authorisation for Ship Recycling (DASR), issued to individual facilities, and required by shipowners as they decide where to recycle their vessels. DASRs are needed before the issuance of a ship’s International Ready for Recycling Certificate which enables owners to identify appropriately qualified yards.

According to Wirana’s analysis, only 36-40 of the country’s recycling facilities have received a DASR so far. This accounts for less than half of the 110-plus yards that have been certified under the IMO’s Hong Kong Convention.

The capacity constraint comes at a time of fierce competition between yards as they seek to procure end-of-life tonnage. War-driven charter rates are keeping many potential scrap candidates in profitable trading at sea.

As a result, Wirana estimates that fewer recycling candidates has prompted recycling yards to raise their offers by $10-15 per light displacement ton. This dynamic is expected to remain in place for some weeks. However, documentary delays are holding up the market.

“Shipowners are asking for DASR and they need a clear answer when considering a recycling facility,” declared Khetan. “The delays need urgent attention so that owners and ship recycling facilities (SRF) can plan with greater certainty. We are mindful of the fact that India has very high number of HK Convention-certified SRF and this would pose a logistical challenge but steps from the designated Competent Authorities will help resolve the difficulties faced by ship recyclers.”

Meanwhile, the sector faces other regulatory hurdles. Earlier this year, David Loosley, Bimco Secretary General and CEO, commented on the disrupted recycling market. In February, the European Commission adopted the 15th edition of the European List of Ship Recycling Facilities.

The 41 listed facilities included 30 in the European Union, Norway and the UK, ten in Türkiye, and one in the US. Not a single yard on the Indian subcontinent, where most ships end their lives, was on the list.

Yet Loosley pointed out that more than 110 Indian recycling yards hold a Hong Kong Convention Statement of Compliance issued by classification society members of the International Association of Classification Societies. And no fewer than 23 facilities in Bangladesh have also been authorised to conduct ship recycling in compliance with the Hong Kong Convention.

Loosley said: “From the point of view of Bimco and our Ship Recycling Alliance – which includes representatives from ship recycling associations, facilities, cash buyers and shipowners – the omission of South Asian facilities on the list is no longer just an administrative detail. Some of these facilities achieve, or even exceed, the EU standards.”