China's new scrap-and-build incentive scheme leaves South Asian recyclers bereft keo nha cai dua ra toi nay tonnage (10/09/24)

South Asian ship recyclers are not happy.
The new scrap-and-build policy has been designed to accelerate the modernisation keo nha cai dua ra toi nay China’s commercial shipping fleet.
In contrast keo nha cai dua ra toi nay a previous scheme that ended some years back, the new policy is heavily skewered towards incentivising owners keo nha cai dua ra toi nay opt for eco-fuel ships.

Chinese shipowners will receive a subsidy keo nha cai dua ra toi nay CNY 700 () per gross ton (gt) keo nha cai dua ra toi nay the vessel being scrapped that can be used against the cost keo nha cai dua ra toi nay a newbuilding ordered at a Chinese shipyard.
Additionally, if the shipowner places an order in China for an Eco-fuel design ship, they can secure another subsidy keo nha cai dua ra toi nay about CNY 600 per gt keo nha cai dua ra toi nay the vessel being recycled.
The policy is only applicable keo nha cai dua ra toi nay ships that are older than 20 years.
Also benefitting from this scheme are Chinese ship recyclers, who have been prevented from purchasing non-Chinese-flagged ships since 2018 due to government restrictions on the importation waste, keo nha cai dua ra toi nay who can only offer prices substantially lower to what is being offered from recyclers on the Indian subcontinent.
Market sources say Chinese scrap prices are currently hovering around the 0 per ldt level as opposed to the Indian subcontinent, where average prices across India, Bangladesh keo nha cai dua ra toi nay Pakistan are at around 0 per ldt.
This price differential has led to an overwhelming majority keo nha cai dua ra toi nay Chinese-owned ships, including smaller coastal vessels, being sold for recycling in Bangladesh.
Brokers who specialise in recycling sales said that with the new subsidy scheme, Chinese shipowners are now achieving a better deal by recycling the ships within China and availing themselves keo nha cai dua ra toi nay subsidies.

On the other hand, subcontinental ship recyclers, especially those in Bangladesh who due to letter keo nha cai dua ra toi nay credit restrictions, have relied on the sale keo nha cai dua ra toi nay small to medium-size Chinese-owned ships that can be acquired cheaply for cash, are seeing their supply dry up.
“The faint hope that Chinese shipowners might send their end-keo nha cai dua ra toi nay-life vessels from China to the subcontinent has faded following the Chinese government’s subsidy policy. Ships initially destined for the subcontinent are being withdrawn from the market as owners opt to scrap them locally,” said Rohit Goyanka, director keo nha cai dua ra toi nay Singapore-based Star Asia Shipbroking.
“Currently, the only ships keeping the Bangladeshi markets busy are smaller ones younger than 20 years keo nha cai dua ra toi nay age that don’t fall in the 2024 policy and are not eligible for the subsidies,” he added.
“The irony is that these 2004 and up Chinese-built ships are being offered at substantially lower prices to the tune keo nha cai dua ra toi nay to per ldt due to sub-standard steel quality and weight loss issues.”
Goyanka said that sentiment among ship recyclers has soured across South Asia as a lack keo nha cai dua ra toi nay available ships has combined with the inability keo nha cai dua ra toi nay recyclers to increase their price offerings to entice shipowners to recycle.
“Most are taking a cautious stance despite a significant shortage keo nha cai dua ra toi nay ships available for sale—a rare situation where market prices decline even amidst a diminished supply,” he said.
The past week saw no fresh recycling sales were reported by brokers keo nha cai dua ra toi nay cash buyers.