Sharma Anil Gms

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ShipRecycling TheGreatestHopefor

14thIronOreandCoalWorldShipping

Summit20121 October 2012


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AgendaAgenda

1. Industry Facts (Scrapping volumes)2. Where it is done (Capacity)3. Prices

4. Which is the right location?.6. Importance of Ship Recycling7. Closin Thou ht

24thIronOreandCoalWorldShippingSummit20121October2012


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1.Industry Facts (Scrapping Volumes)1.Industry Facts (Scrapping Volumes)

As of Sept 15, 2012 about 40.8 million DWT has been recycled

Dry Bulk: 26.1 mill DWT vs. 25.3 mill in 2011

Wet: 10.5 mill DWT vs. 10.4 mill in 2011

In Dry Bulk Sector, Panamaxes and Handymaxes have

In Wet Sector onl Suezmaxes and Aframaxes have sur assedlast years totals

o a scrap vo umes n are expec e o ncrease yover 2011 levels


Source: Clarksons

September 2012


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1.1 Bulk Carriers1.1 Bulk Carriers

Sold for Recycling 2011(No./DWT)

2012 YTD(No./DWT)

Capesize 74 11,533,655 69 11,123,455

, , , ,

Handymax 48 2,239,479 74 3,374,724

Handysize 291 6,536,167 236 6,169,930

Minibulk 86 511,316 57 384,288

Total 565 25,301,813 511 26,122,798

Source: Allied

Shipbroking Inc.

September 2012



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1.2 Tankers1.2 Tankers

Sold For Recycling 2011(No./DWT) 2012 YTD(No./ DWT)

ULCC 2 618,576 2 614,016

VLCC 12 3,239,246 8 2,097,570

Suezmax 7 1,002,063 21 3,089,604

Aframax 28 2,656,659 30 2,894,682

Panamax 6 411,956 3 206,005

Product 68 2,207,837 48 1,517,494

Minitank 44 225,574 20 113,742

Total 167 10,361,911 132 10,533,113

Source: Allied

Shipbroking Inc

September 2012

Source:



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1.3 Historical Highs1.3 Historical Highs

19851985 - 2012 Comparison

. on w

9 Million LDT 40

45

201235

1985

2012

Already 40.8 Million Dwt30

201985 2012



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2. Where it is done (Capacity)2. Where it is done (Capacity)

Number of yards in each Country:Number of yards in each Country:

Indian subcontinent

India (200)Bangladesh (35)

Pakistan (50 of 125)

China (20) Turkey (32)

________Note: all figures are approximates

These 5 countries (with 80% Asian) recycle more than 90% of the

worlds fleet.



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3. Prices3. Prices3.1 BDA: 9/20113.1 BDA: 9/2011 9/20129/2012

550

500

D/TKR CHINA

450

C/TKR CHINA

C/TKR SUBCON

B/C CHINA

350

400

300

9-5-2011 10-5-2011 11-5-2011 12-5-2011 1-5-2012 2-5-2012 3-5-2012 4-5-2012 5-5-2012 6-5-2012 7-5-2012 8-5-2012 9-5-2012



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33--2. Factors affecting Pricing2. Factors affecting Pricing

1. Supply

2. Demand

3. Capacity

4. Domestic Fundamentals

Steel Prices

Currenc

Government Regulations



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3.3 Fleet Investment3.3 Fleet Investment

and attempt to modernize their fleets.

In addition to the various financing options (Cash reserves, Equityand Debt Financing), Cash surplus generated by ship recycling

options have become relatively common.



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4. Which is the right location?4. Which is the right location? n in r :n in r :

India is the right place Decision lies with the shipowners

Bulk Carriers:Bulk Carriers: All markets respond to this type of tonnage

The key is the size of the vessel

Bangladesh has absorbed majority of Capes

India digests Handymax - Handysize

Buyers in Pakistan have show their interest

Increased supply of Suezmax and VLCCa s an prov es e eman an gas ree or o -wor s

1October2012 4thIronOreandCoalWorldShippingSummit2012 11


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4. Which is the right location?4. Which is the right location?

India Ban ladesh Pakistan

Containers VLOC ULCC

Handymax Capes VLCC

Panamax Panamax Suezmax

General Cargo VLCC Aframax

Aframax Suezmax Panamax

Handysize Handymax Handymax

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5. 1 Headline Risk? MV Asia Union5. 1 Headline Risk? MV Asia Union

BBC News, Anbarasan Ethirajan,September 2011: Toxic Ship MV Asia Unionleaves Bangladeshi waters

Environmental groups said the vessel might possess hazardous substances

includin asbestos toxic aints and chemical residues which are harmful to human

health and the environment.

are dumped in coastal areas, posing a danger to the environment and to workers.



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5.2 Headline Risk? Oriental Nicety ex Exxon Valdez5.2 Headline Risk? Oriental Nicety ex Exxon Valdez,,

NGO Shipbreaking Platform, March 2012: Media Alert-Toxic ship Exxon Valdezsent for dismantling

Basel Action Network: It is outrageous that this ship, that has already created one

environmental catastrophe is being allowed to kill and pollute yet again

,

vessels for demolition recently bought the ship.

p rea ng at orm, ugust : xxon a ez rompts n a sSupreme Court to Blow Whistle on Toxic Shipbreaking Beaches

Indian authorities claimed their inspection did not reveal any hazardous materials

on-board the vessel as cargo, they could not determine what hazardous waste was

contained in the shi s structure which most likel include PCBs asbestos andresidual fuels amongst many others



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5.3 Headline Risk?5.3 Headline Risk? NorthenNorthen VitalityVitality(Container / 40,080 DWT/ 1997 / South Korea)(Container / 40,080 DWT/ 1997 / South Korea)

NGO Shipbreaking Platform, Ingvild Jenssen, 7 September 2012: NGOs call onGermany: stop toxic ship before it reached Alang graveyard

The Northern Vitality was sold last week by its German owner to the famous ,

in Singapore, and the Northern Felicity anchored in Dubai.

Hazardous materials such as asbestos, refrigerants, oil residues, sludge andheavy metals are bound to be onboard the Northern Vitality, either in its structure

or in electronic equipment, paints and the ships stores



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6.1 Importance of Ship Recycling6.1 Importance of Ship Recycling Economically Smart andEconomically Smart andEnvironmentally FriendlyEnvironmentally Friendly

Electrical Cables Engine Furniture

Compressors

Kitchen WareSteel Scrap

Waste


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6.2 Importance of Ship Recycling6.2 Importance of Ship Recycling SocioSocio--EconomicEconomicBenefits of Ship RecyclingBenefits of Ship Recycling

As per Institute of Scrap Recycling Industries:

It takes four times as much energy to make steel from ore.

Benefits of using recycled steel instead of ore to make new steel:av ngs n energy: 74%

Savings in virgin materials: 90%

Reduction in water pollution: 76%Reduction in air pollution: 86%

Reduction in mining wastes: 97%

Reduction in consumer waste generated: 105%



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6.3 Environmentally Responsible and Safe Ship6.3 Environmentally Responsible and Safe ShipRec clinRec clin

What are the options to owners?

1.Ignore CSR

2.Create a robust CSR programa. n ng ree ng s ps

b. Resell to trading buyers (assuming they exist!!!)

. ... ,

d. Other1) Create own program / follow Guidelines on

Transitional Measures for Ship-owners Selling

Ships for Recycling



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6.4 Ship Recycling6.4 Ship Recycling -- Greatest Hope for Recovery?Greatest Hope for Recovery?

Important Pillar (Balancer) of Shipping Newbuilding record years (pre-2008)

ecyc ng recor years -

New Building Orders Charter rates (new/old ships, availability, etc)

Sale and Purchase (2nd

values at par with scrap values) Ship Finance (residual values)



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7. Closing Thought7. Closing Thought

Ship recycling affects almost every aspect of shipping, chartering,

A vibrant ship recycling industry is essential to bring stability to theshipping industry.

IMOs Hong Kong Convention has created clear guidelines safe andenvironmentally recycling of ships



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GMSGMS

Established in USA in 1992.LARGEST CASH BUYER IN THE WORLD!In last two years, principals of GMS have delivered more than a quarter of the

.

World's FIRST ISO 9001:2000 certified Cash Buyer.

sa es o ces n a o e ma or s p recyc ng mar e s n e wor(Bangladesh, China, India, Pakistan and Turkey).

Offices in USA, UAE and CHINA to rovide 24/7/ service to clients worldwide.

Financial and Management capability to:Buy fleets on simple CASH "as is where is terms.

Structure deals

Leader in Green Recycling:IMOs Hong Kong ConventionGMS-GL ProgramDevelopment of Green Yards


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