China scrapped ships with a total capacity of 2.2 million tonnes last year, 80 percent less than 2003, according to London-based Clarkson, the world's largest shipbroker. Chinese breakers could not match the prices offered by Bangladesh and India after Beijing imposed curbs on the steel industry in March to slow the world's fastest-growing major economy.

``Chinese breaking yards are in a position to provide all facilities that can tackle lethal asbestos, fuel oil, lead and hazardous wastes,'' said Thomson Kam, general manager of Hong Kong-based Airmingtons, which buys ships from owners and sells them to scrap yards. He was speaking at the Shipping China 2005 conference in Shanghai.

Greenpeace and other lobby groups have protested against the labor and environmental standards of the scrapping industries in Bangladesh and India. Chinese breakers scrap ships in dry docks. In India and Bangladesh, ships are driven onto the beach and taken apart by workers armed with blow torches.

``We should develop `green recycling','' said Yan Heming, president of the China National Ship Recycling Association in remarks also made at the conference.

Royal P&O Nedlloyd, a Rotterdam-based container shipping company, supervised the clean dismantling of 19 container ships from its fleet in China in 2003, Yan said. Other shipowners may follow this example under pressure from environmental groups.

Prices paid by breakers to scrap ships rose to a record US$470 (HK$3,666) per tonne of recycled steel in Bangladesh last month. Record earnings for tankers and other ships have discouraged scrapping and the amount of steel recovered by breakers fell 54 percent last year, according to shipbroker Simpson, Spence & Young.

Demand for scrap steel and prices in the Chinese market may rise this year, said Kam from Airmingtons.

``[2008] Olympic projects and infrastructure in rural areas will increase demand for steel plates,'' he said.