In the year to May, the industrial gross production value, economic effect and total ship export of China’s 80 shipbuilding and its related companies which are subject to be monitored were seen to go downwards and production management condition also got worse.
According to a recent report of the China Association of the National Shipbuilding Industry (CANSI), vessel delivery made by those 39 companies amounted to a combined 14.64m dwt, down by 26.7% comparing with the same time period a year ago. Newbuilding order intakes increased by 62.2% to 12.78m dwt while their orderbooks by the end of May declined by 20.9% to 95.38m dwt.
As for export ship, 39 major shipbuilders delivered a total of 12.06m dwt in the first five months, showing a 27.8% decline from a year ago. Also, the order intakes of ships for export totaled 11.45m dwt, increasing sharply by 103% while orderbook declined by 22.1% to 80.21m dwt.
Meanwhile, the complete industrial gross production value of the China’s 80 shipbuilding and its related companies was CNY 135.7bn (around above $22bn) decreasing by 17.5% from a year ago, of which shipbuilding sector dropped by 31.6% to CNY 69.6bn while ship equipment showed a 31.5% drop to CNY 9.49bn and ship repair also declined by 9.2% to CNY 4.84bn.
During the same period, the complete export trading value of the 80 companies came to CNY 64.4bn with a 24.4% decline comparing with the same time period a year ago, of which, shipbuilding had 25.4% decreased to CNY 59bn while ship equipment showed a 35% decrease to CNY 2.16bn and ship repair also declined by 19.8% to CNY 2.84bn.
In the year to May, the operating revenue of those 80 companies was CNY 84.1bn with a year-on-year decline of 22.4% while total profit was recorded to be CNY 2.47bn, also showing a 59.3% decrease in comparison to the same time period of last year.
While Chinese shipbuilding industry is gaining new orders during the first five months of this year, its newbuilding delivery turns out to keep declining.
According to statistical data from the China Association of the National Shipbuilding Industry (CANSI), Chinese shipbuilders delivered overall 17.19m dwt from January to May of this year, down by 23.7% from the same period of last year.
On the other hand, Chinese yards contracted a total of 13.75m dwt, up by 44.2% year-on-year.
As of the end of May, China stood on 103.51m dwt, down by 23% year-on-year and by 3.2% against the end of 2012.
During the first five months of the year, China delivered 14.16m dwt of export ships, which saw a y-o-y decrease of 24.6%, while contracted 12.32m-dwt newbuildings for export, sharply increased by 80.1%.
Export-ship orderbook at the end of May shrank by 24.1% from a year earlier to 87.05m dwt.
Vessels for export are estimated to account for 82.4%, 89.6% and 84.1% of total delivery, new order and backlog, respectively.
Chinese shipbuilding industry bagged newbuilding orders of overall 126 vessels in May, 2013, showing a sharp rise of 85.29% from the previous month in numerical terms.
Tallied by China Water Transport, China inked newbuilding contracts for 65 bulkers including nine very large ore carriers, six capesizes, 12 kamsarmaxes, 18 panamaxes, two supramaxes, 18 handysizes and so on along with nine PCs and 12 containerships.
In addition, Chinese yards won orders for eight LNG carriers, two multipurpose vessels, four heavy lifters, one tug boat, two self-propelled barges, seven offshore vessels, three drilling platforms and 14 other types of vessels.
In the full May, newbuilding prices of tanker and LNG carrier slightly declined while those of bulker and containership showed a favorable state with a minor rise, said the data.
Chinese shipbuilding companies have received 4.04m dwt new building orders during May, an increase of 73%, surpassing both South Korea and Japan for the month.
The growth indicates that ship owners may feel that shipbuilding price have bottomed out and the time is ripe to "buy low", according to analysts in China, who now predict that newbuilding orders will increase further.
Shipbuilding industry is a heavy industry undertaking the design, construction, maintenance and testing of various military and civil ships and producing the ancillary equipment.
Since 2012, under the environment of slowdown in the growth of global economy and trade, the shipping market is continuously in depression, and the development of China's shipbuilding industry faces huge challenges. From January to September in 2012, the completion volume of China's shipbuilding was 41.58 million deadweight tons, with a decline of 18.5% YOY. The volume of new ship orders was 15.41 million deadweight tons, with a decline of 46.9% YOY. By the end of September 2012, the volume of reserve ship orders of China's shipbuilding enterprises was 120.9 million deadweight tons, with a decrease of 28.4% YOY, falling by 19.4% over the end of 2011. From January to September in 2012, the completed ship export were 34.34 million deadweight tons, with a decrease of 20.2% YOY; the order volume of ship export was 12 million deadweight tons, with a decrease of 44.5% YOY; at the end of September 2012, the reserve orders of export ships of China's shipbuilding enterprises were 101.19 million deadweight tons, with a decrease of 27% YOY. The export ships separately accounted for 82.6%, 77.9% and 83.7% of completion volume, new order volume and reserve order volume of China's shipbuilding.
In April 2012, China's Ministry of Industry issued the Notice on Further Strengthening the M&A of Enterprises, putting forward to promote the advantageous enterprises to implement combination of the strong, trans-regional M&A, overseas M&A and investment cooperation, in order to raise industrial concentration rate. It also listed the shipbuilding industry as one of the key industries. In the integration process of China's shipbuilding industry, some enterprises with excellent operation performance are expected to ultimately survive. In addition, some shipbuilding enterprises focusing on market segments and specializing in characteristic production will also survive.
In the first four months of this year, the industrial gross production value, economic benefit and total ship export of China’s 80 shipbuilding and its related companies which are subject to be monitored were seen to go downwards and production management condition also got worse.
According to the latest report released by the China Association of the National Shipbuilding Industry (CANSI), the industrial gross production value of those 80 companies amounted to CNY 101.3bn (around more than $16.4bn), a 18.9% drop comparing with the same period of last year, of which, shipbuilding industry achieved CNY 52.4bn, showing a 33.3% fall while marine equipment industry had CNY 7.55bn and ship repair industry, CNY 3.77bn, each having drops of 31.4% and 7.2%.
During the same period, complete export trading value of the 80 companies was tallied to be CNY 46.8bn in total, a 29% drop from the same period of the previous year, of which, the shipbuilding industry had CNY 42bn with a 29.3% fall while the marine equipment industry had CNY 1.87bn with a 37% decline and the ship repair industry, CNY 2.45bn with a 16.5% drop.
For the first four months, the operating revenue of those 80 companies was CNY 66.3bn with a year-on-year decline of 22.5% while total profit was recorded to be CNY 2.05bn, also showing a 56.7% decrease in comparison to the same time period of last year.
Japanese shipbuilding industry officials recently said that “Japanese shipyards has received new orders at a level almost the same with booming period”. At the same time, Korean shipyards successively Schriever high-tech and high-value-added orders as well as offshore orders. Both S.Korea and Japan has find the way to keep their competitiveness in the market downturn by strengthening their innovation capacity.
It is reported that key shipbuilders in Japan and S.Korean have their own research units to track and develop most advance ship technology globally. Even in the market trough, they never suspended investment in the R&D. For example, in the downturn of 2010, the investment in ship technology research and development still accounted for over 15% of the annual expenditure of the six main shipyards in Korean, which gained shipowners’ acknowledge-ment. “Innovation decides how far the shipyard can go”, as an industry expert put it.
Zhang Guangqin, director of CANSI says that order is the eternal theme for shipyards’ survival. China’s shipowners pay more attention to eco-designed and low-cost ships in compliance with emerging new regulations. In the tense circumstances, shipyards have to enhance innovation capacity to develop new marketable ship types.
Many small and medium shipyards choose to develop special ship to avoid the fierce competition with bigger players. Diversifies competition - to develop chemical tanker, exploration vessels, containerships and other high-tech and high-value-added ships is another way for shipyards in the overall overcapacity market.
Besides, Zhang also says that shipyards should put priority on technology negotiation instead of quotation and business negotiation. Quotation should be made after the technical specifications be fully understood.
Jiangsu Province’s Economic and Information Technology Commission reviews Q1 2013 province-wide shipyard finances. The review of the shipbuilding industry’s performance showed that 44 privately-owned shipbuilders out of 66 failed to win new orders and none of major seven builders could ink a contract, with 30% of large corporations recording a loss, reports China Shipbuilding Industry Co.
Shipbuilders’ profit margins in Jiangsu appear to be sharply decreasing from 22% recorded in 2010 and four companies out of thirteen majors reported a loss during the first quarter of this year.
Although the province’s newbuilding delivery was up on the same quarter last year, the scope of increase has plummeted with decreasing orderbook standing at 832 vessels of 37.912-million dwt with a remarkable decrease of 27.7% year-on-year.
Recently, according to this source Jiangsu-based COSCO (Lianyungang) Shipyard was reported to have shut down due to a protracted loss. It appears that shipyards which have slots on schedule for a year and a half are resorting to the expedient of delaying lead time and several small while mid-sized yards face closing their businesses.
For two decades China has been the driving force behind global industrial growth and the demand for shipping capacity. But, its recent dip in growth has been accompanied by some significant trends; bigger increases in consumption and services, less in investment and manufacturing. This is the classic trajectory of a developing economy and shipping is a classic service industry. Just how big is China's role as service provider to the shipping industry likely to be?
Service at the Double…
While China has been generating something like 50% of the growth in demand for shipping capacity over the last decade, it has also made significant inroads on two aspects of the service side of the industry. First, Chinese-built vessels are providing a rapidly growing proportion of the fleet that services the shipping industry. Secondly, China has been growing its own fleet.
Build and Carry…
Since 2010 China has been the pre-eminent shipbuilder, accounting for almost 40% of all deliveries. Chinese-built vessels now account for 20% of the global fleet, almost 11,000 vessels. Moreover, China still holds almost 40% of the current orderbook, about 6% of the world fleet. The average age of the Chinese built fleet is a youthful 7.6 years compared to a global figure of 20.3 years, so relatively little is going to be scrapped soon. Chinese-built vessels are going to become an even more prominent feature of the global shipping scene, quite soon a quarter of the total.
Own and Carry.
China last year passed a milestone when its fleet reached 100m GT. The 6,300+ vessel Chinese fleet now accounts for 10% of the total. Its numbers have increased by 58% since 2005 and its capacity by 280%. That’s twice as fast as the world fleet in numbers and 3.7 times its capacity growth. China now sits only behind Japan and Greece, each of which has about 14%, as an owner of capacity.
The average age of the Chinese-owned fleet is 16.7 years. Few of the diversified major owners have younger fleets – e.g. Japan 14 years, Greece 16 years. Again, scrapping seems likely to be a lesser feature of the Chinese fleet. In contrast, deliveries of Chinese-owned tonnage will feature large; 13.4% of the total orderbook equivalent to 21% of their existing fleet is Chinese-owned. By 2014, the Chinese fleet could account for 12% of the global fleet.
Cash (in) and Carry…
For the foreseeable future, China will be pivotal for global economic growth and the demand for shipping. But as its economy matures it will also cash in on service sectors like shipping. The super-boom allowed China to carve out a prominent position, up to 25% of capacity built in China and 12% Chinese-owned. As the lead builder and owner (albeit of a smaller volume) of contracted tonnage this year, a slower but persistent trend is emerging. The take away Chinese service looks like becoming a take-over.
Year-to-March, China’s 80 shipbuilding and related companies which are subject to be monitored showed decreases all in gross production value, economic effect and total amount of ship exports with aggravated production management.
According to the China Association of National Shipbuilding Industry, in the first three months in 2013, 39 major shipbuilders to be monitored delivered vessels of a combined of 8.41m dwt, showing a 14.4% decrease against the same quarter of last year while winning 8.67m dwt of newbuildings, which represents a 65.9% of increase with 94.98m dwt of orderbook, down by 25.7%.
During the same period, 39 major shipyards exported 6.97m dwt of ships to foreign shipowners, down by 17.4% against the same quarter of 2012 while winning 93.6% increased export ships, a total of 7.94m dwt. As of the tail end of March, orderbook was seen to have stood on a combined 81.2m dwt, down by 24.2%.
Meanwhile, the gross production value of 80 shipbuilding and related companies which are subject to be monitored was reported to be a total of CNY 72.6bn (equating to $11.7bn) in the first quarter of this year, down by 21.3% year-on-year, among which, CNY 36.2bn was posted in shipbuilding industry showing a 30.6% decline comparing with the same quarter of 2012. As for ship equipment industry, CNY 1.99bn of gross production value was seen with a decrease of 24.2% while ship repair industry saw CNY 5.37bn with a 33.5% of drop.
Export trade value of 80 shipbuilding and related companies was reported to be CNY 31.8bn in the same period with a 30.8% decrease, among which, the one in shipbuilding industry was seen to be CNY 25.8bn, having showed a 26.6% decline year-on-year. In terms of ship equipment industry, it reported CNY 890m with a drop of 35% while ship repair industry showed CNY 880m with a 32% drop.
During a period from January to March, revenues of 80 quality shipbuilding and related companies to be monitored were reported to be CNY 48.8bn with a 19.2% decline against the same quarter of last year. Total profits, by the way, were calculated to be CNY 970m with a drop of 68.9% as well.