Recent steel price hikes mean that shipyard repair costs are rising rapidly. In China, the price of HRB (hot-rolled band) per metric tonne has almost doubled. Prices have also more than trebled in the US over the past 18 months ($550 to $1,680) and have risen in Europe from around $450 to $1,344 per tonne.

Shipyards are responding to the surge by increasing their own prices. These hikes impact the cost of crop and renewal repairs. To combat this, ship owners and operators must find new ways to offset rising costs while keeping work schedules on track. They may also look to reduce the project time for repairs to reap the rewards of current charter rates. This includes decade high spot rates for Capesize bulk carriers.

Less steel means lower costs

One option is to complete steel vessel repairs using structural composites like SPS (Sandwich Plate System), as opposed to crop and renewal. As a permanent class-approved structural solution that comprises two metal plates bonded with a solid elastomer core, SPS reduces the amount of steel required for a repair by up to 60%. Scrap from the repair process is eliminated, while insulation, electrical and piped service runs remain intact. When combined with a 40% reduction in project duration, and the ability to carry out repairs during operation to reduce off-hire days, the commercial benefits of SPS are further enhanced.

Adopting a fresh approach to vessel repair that requires less steel is even more important for yards that signed contracts for vessel repair over a year ago. The unpredictable rising cost of steel means profits are being reduced and, in some cases, completely dissolved.

Steel grade availability

Another key consideration is that structural composites use thinner steel. This is currently cheaper and more widely available than the thicker steel typically required for crop and renewal, which yards are struggling to source. The point is well illustrated in Tokyo Steel Manufacturing Co Ltd’s recent announcement, in which it stated that it would raise prices for heavy plates in July 2020 by 4.9%. Asian rivals, such as South Korea’s Posco and Hyundai Steel, and China’s Baoshan Iron & Steel Co Ltd (Baosteel), are likely to follow suit.

A new way of thinking

The pandemic has led to increased volatility across global economies, with major commodity supply chains affected. Ship owners, operators and yards must therefore respond with agility and overhaul long-standing processes if they are to manage the consequent changes effectively. In this instance, structural composite steel repairs hold the key to staying one step ahead of the pack and avoiding the financial setback of surging steel prices.

To view all maritime applications of SPS and vessel repair, visit SPS Maritime.