Tough Situations Due to Falling Ship Dismantling Quantity and Prices——Industry Economic Performancein 2018

By China National Shiprecycling Association (CNSA)

The 34th meeting of the 18th Central Leading Group on Deepening Reform adopted the Implementation Plan on Banning the Entry of Foreign Waste and Promoting the Reform of Solid Waste Import Management System in April 2017, and decided to phase out the import of solid waste by 2019. In April 2018,the Ministry of Ecological Environment,NDRC, the Ministry of Commerce and the General Administration of Customs issued a notice on the adjustment of the Catalogue of Imported Waste Management, waste ships were listed in the catalogue of prohibited imports of solid waste effective December 31,2018. Subject to the tightening by the Ministry of Ecological Environment on the examination and approval of the total amount of permits for imported waste ships,environmental supervision and inspection actions, scraping and replacement ending ahead of schedule of aging domestic transport ships, Te transacted dismantling volume of waste ships of member enterprises of CNSA was greatly reduced in 2018, and the production and operation situation was severe.

Dismantling Volume and Price Both Fall

In 2018, CNSA member enterprises dismantled 37 domestic and foreign waste ships, totaling 241700 light displacement tons (LDT), down 81.05% in terms of LDT year on year (YOY). They included 17 domestic waste ships, 28400 LDT, 20 imported waste ships, 213300 LDT. The total trade volume of domestic and foreign waste ships was about RMB353 million,down 84.17% YOY. This is the first time since 2007 that the annual dismantling of waste ships in China is at the end of the five countries in the world, accounting for only 3.7% of the total amount of ship dismantling in the five countries.

Contribution to energy conservation and emission reduction. In 2018, the member enterprises of CNSA recovered and recycled more than 200,000 tons of waste steel, and non-ferrous metals among other renewable resources for the country.Compared with the native resources, they can save 580000 tons of iron ore, 200000 tons of coal, 340000 tons of water, and reduce emissions of 600000 tons of solid waste and 250000 tons of carbon dioxide.

The average transaction price was down. The annual average price of the domestic transacted waste ships was RMB835.76/LDT, with a YOY decrease of 52.38%; the average annual price of imported waste ships was USD152.72 dollars/LDT, with a YOY decrease of 41.38%. In addition, the trade volume of domestic and foreign waste ships was about 353 million, down 84.17% YOY.

The traded ship types changed. In terms of the three main ship types, out of the domestic and foreign waste ships traded by the dismantling enterprises,there were 5 bulk carriers (including general cargo ships), 18,400 LDT,accounting for 7.6% of the total LDT, and the YOY decline of nearly 58 percentage points; there were 3 tankers, 5,500 LDT,accounting for 2.3% of the total LDT, up 0.7 percentage points YOY; there were 3 container ships, 56,000 LDT, accounting for 23.2% of the total LDT, with a yearon-year pickup of 4.5 percentage points;there were 26 other ship types, 152,300 LDT, accounting for 63% of the total LDT.

The age of the transacted waste ships continued to decline. Among the domestic and foreign waste ships traded by ship dismantling enterprises, the light displacement tonnage of dismantled ship ages within 18 years (including 18 years) accounted for 1.2% of the total LDT, down nearly 24 percentage points YOY.Among them, imported waste ships accounted for 1% of the total imported LDT, and domestic waste ships accounted for 2.5% of the total domestic LDT.

There was a marked reduction in the number of domestic ships traded.Of the domestic and foreign waste ships traded, 16 ships or 11000 LDT were built by China, accounting for 5% of the total LDT, down nearly 17 percentage points YOY. Among them, China built a total of 12 domestic waste ships, 9100 LDT, a total of 4 imported waste ships, 2200 LDT.

Situation of Enterprise Production and Operation Not Optimistic

In 2018, only three members of CNSA obtained the approval of the import of a small number of waste ships, and the phase-out and replacement of aging carriers and single-hull tankers of the domestic large-scale shipping enterprise were basically completed by the end of 2017,with the exception that a few could maintain a certain production and operation, the majority of enterprises caused the production and operation in trouble due to under capacity operation, including the production standstill due to environmental protection and rectification, the heavy debt crisis, the transformation and conversion to other products, and the implementation of bankruptcy liquidation and reorganization.Therefore, even if the domestic steel crap demand increased in 2018, the price of the market was rising and the member enterprises could only be the people who make a sigh of view.