The International Ship Recycling Association issued a press release at the end of last week stating its confidence in the capacity of European Union approved recycling yards.
“ISRA concludes that the present capacity of the European List of ship recycling facilities is sufficient to deal with the increased supply of (EU-flagged) ships to be recycled. Shipowners will find ample capacity to the EU List, which will be extended in due time”
This statement came as a surprise to many shipowners with European flagged vessels, who since the EU SRR regulation came into force in December 2018 have grappled with a very different reality, now exacerbated by the effects of Covid-19.
Of the 41 yards on the EU list, some of which are not even operational, only 6 yards are capable are capable of recycling vessels on commercially competitive terms – they are all based in Aliaga, Turkey.
The economic effects of Covid-19 have resulted in increased scrapping activity among European shipowners, while recycling yards either closed or drastically reduced their operations during the first ‘lock-down’ period from March/April to June.
Consequently there is a large backlog of vessels in both Turkey and the Subcontinent awaiting recycling. Realistically many shipowners will have to wait until next year next year to recycle their ships in Turkey, unless they are content to settle for a very low price now.
While there are EU approved yards that can physically accommodate large commercial vessels, they cannot pay the prices needed to make them commercially viable options – or at least not currently – unless shipowners are willing to subsidise recycling operations, which the majority cannot afford to do at this time.
