Already since 2000 talks about ship recycling have been going on. In May 2009, the Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships was adopted within IMO. However, the convention only enters into force 24 months after 15 states, representing 40% of world merchant shipping by gross tonnage. With only 4 countries having ratified the convention and not even representing the necessary 3% ship recycling volume of their combined tonnage, it will take at least another 5 to 7 years before the Convention will enter into force.
At European level, ship recycling regulation has been adopted in December 2013 (Regulation on Ship Recycling EU/1257/2013) to facilitate ratification and early implementation of the Hong Kong Convention and complement it where appropriate.
At the core of the European regulation stands the safe and environmentally sound ship dismantling activities. Challenge for regional rules in this area is the weak jurisdictional link to the facilities where recycling takes place. EU regulations seek to overcome this by establishing and maintaining a EU list of ship recycling facilities that meet EU standards. As from 1 July 2016, shipyards outside Europe can apply to be included in the European list of approved facilities. And by adding strict environmental requirements, Europa wants to prevent worst practices on safety and health observed in past decades in countries like Pakistan, India, and Bangladesh, dismantling about two thirds of all ships worldwide. By allowing these countries on the EU list of ship recycling, pressure is put on these countries’ facilities to upgrade them, include proper downstream waste management and international labour rights.
Offer and demand
Offer and demand, that’s how it goes, also in ship recycling. The location for dismantling ships is determined by the price the yard is willing to pay for the steel and non-ferrous materials of ships. The higher the demand of steel mills for scrap, the higher the price the yard is willing to pay. Europe together with the USA are the largest scrap exporters, while South East Asia recycles most ships.
The situation is reflected in the following graph illustrating the price paid in most import recycling countries (Bangladesh, India, Pakistan, China, Turkey and Europe).
The world’s demolition prices per Lightweight Long ton on various locations (source: Compiled by Sea2Cradle for this research, based on various sources).
Note: Lightweight ship is the most relevant quantity in ship recycling as it gives the total mass of a ship when fully equipped and ready to sail but without crew, stores, fuel, ballast water or cargo on board.