As India reels under the effect of COVID-19 second wave, oxygen supply has become a primary issue. And the ship recycling industry is at the receiving end of it.
The ship recycling yard, Alang is at the brink of shutting down as it faces a shortage in oxygen supply over COVID issues. This is because of the government cap on oxygen supply for industrial use and ship recycling yards like Alang are staring at a shutdown
According to a statement issued by the Lead Coordinator, Sustainable Ship and Offshore Recycling Program at Global Marketing Systems, Inc (GMS), Anand Hiremath “Alang could be closed by the end of the week as there is no industrial grade oxygen supply”.
GMS is the world’s largest buyer of ships for demolition. So, when they are stating it, the shipping industry is bound to hear. Hiremath underlined the extent of the problem when he revealed that ship recycling yards have already used up their reserves.
At present, they have the capacity to continue work for 3 more days and will soon run out of oxygen supply. A Ship Recycling Consultancy based in Alang called Guideship Consulting Services LLP, further elucidated the situation when their partner Rohith Agarwal underlined the importance of oxygen in ship recycling.
“Oxygen supplies are very important in ship dismantling, I would say the most important ingredient for cutting,” he had said.
With the help of oxyfuel steel of 0.5- 250mm thickness are cut down for scrapping. Without this low-cost equipment, the cost of scrapping vessels will increase many folds. Many yards don’t have any other technology rather than using this manual oxyfuel cutting process.
For this process to prosper 99.5% pure oxygen is needed which isn’t possible without an industrial oxygen supply. Any decrease in oxygen purity decreases the cutting speed. Even a 1% drop in purity will lead to a 25% reduction in cutting speed. A 25% increase in gas consumption will happen because of this.
“The cutting speed and cut edge quality are primarily determined by the purity of the oxygen stream,” added Rohith Agarwal.
All this has resulted in output reduction, making the prices of steel plates soar. A 12mm steel plate that usually sells at ₹36,800 a ton is now going at ₹41,000 a ton.
Business has gone slow as fewer ships are coming at Alang because of the pandemic second wave. While ships are getting beached the demolition supplies are low. Just In March and April only 10 and 5 ships were beached at Alang.
“The ship charter rates are good, so fewer vessels are available for scrapping. There are very few ships available in the market that prefer to be dismantled by following green practices. Most non-green ships destined for scrapping are being diverted to Bangladesh and Pakistan,” revealed Anand Hiremath.
90 to 120 recycling plots in Alang are green certificated but many of them aren’t operational due to a shortage of ships.
Amidst this, the fresh COVID restrictions and lockdown will affect ship deliveries and teaching. Experts fear that the lockdown will prevent buyers to shift the steel products resulting in steel stockpiling in yards. This will affect the prices.
“For the time being, however, levels and demand continue to hold at impressive numbers in the mid-to-high $400s per light displacement tonnage (LDT),” read the statement issued by GMS.