China’s ban on scrapping foreign vessels will be a boost for South Asian recyclers

Looking back nearly 66% of the total vessels scrapped at Chinese yards in 2017 were foreign flagged vessels. In other words, any such ban in 2017 would have left China with just 44 Chinese flagged vessels instead of the 128 vessels that were actually scrapped. Moreover, Chinese flagged vessels form only a small share of the global fleet. In fact, in the present fleet of merchant vessels more than 10,000 dwt and aged 20 years or more, only 3.7% fly a Chinese flag. As such, only low numbers of Chinese flag vessels are likely to be scrapped in the short term.

In the absence of Chinese scrapyards, owners of non-Chinese flagged vessels, which earlier parked their ageing vessels at Chinese scrapyards, will shift to yards in South Asia. India tops the list of demolition locations, with about 27% of global scrappings going to Indian yards, followed by Bangladesh and Pakistan; at 20% and 11% respectively.