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2013-04-23 10:09:00

New orders at Chinese shipyards saw a 71-percent surge from a year ago during the first quarter, according to the China Association of the National Shipbuilding Industry.
New orders at Chinese shipyards stood at 9.57 million deadweight tons, according to the association. During the same period, the volume of finished vessels declined by 16 percent from a year earlier to 9.45 million deadweight tons while orders in hand dropped by 25 percent to 107 million deadweight tons.
But analysts don't think the increase in new orders means an industry recovery. They believe many shipping companies are placing their orders at a time when shipbuilding costs are at their lowest for years.
"It takes about two years to build a ship. So if you place orders now, you will be able to use the new ships in two years when a market recovery is expected," a market source said.
The association predicts the shipping industry will see a moderate recovery from a year ago. But the difficult market conditions are likely to persist for another couple of years, it said.

2013-04-22 13:16:46

In 2012, Chinese shipbuilding industry saw all three indexes drop and experienced severe recessions where almost 300 companies slipped into the red. While market players expect this downturn to continue over the next couple of years, mergers and acquisitions (M&A) have appeared to be a possible solution, however, come to a deadlock of Chinese local governments’ policy to provide protection umbrellas for local companies.
Industrial professionals said that there has been a significant structural change in shipbuilding and related industries around the world after the global financial crisis. China saw a sharp decrease in demands for general merchant ship which is a major vessel type of Chinese yards, such as bulker and etc., and the market share of high-value vessels, very large containership, LNG carrier and so on, has notably increased that China’s shipbuilding and related corporations got to experience a deeper depression due to a lack of investment in R&D.  
Thus, for the Chinese corporations to get out of this crisis, the professionals expect mergers and acquisitions among companies to play a key role since a better company will lead a poor one. Also, the Ministry of Industry and Information Technology of China and other eleven ministries jointly released an “opinion on mergers and acquisitions among major companies in the industry” that the issue regarding M&A has surfaced.
Back in 2010, the State Council of China put forward an opinion for M&A among companies and proposals on the issue were suggested for several times in the industry, however, the plans did not come to a settlement. The industry has blamed local governments’ protectionism to be the biggest obstacle.
Shipbuilding and related industries have been the driving force behind the development of industry in extensive sectors and created job opportunities directly and indirectly as being a technology, capital and labor-intensive industry, having also affected on GDP of local governments. The related companies concentrating in coastal cities have played a key role in the development of the cities and brought benefits to productive value and tax revenue increases.
Under this situation, when mergers and acquisitions are actively proceeded in shipbuilding and related corporations, no wonder the fiscal revenue of local governments will be influenced. Thus, the local governments have a negative view on the M&A and prefer to a temporary expedient such as encouraging loans from banks and etc.
Currently, M&A cannot be proceeded properly due to the government’s interruption when it must be led and conducted by the market. Chinese industry is said to be stressing that in order for shipbuilding industry to progress normally, protectionism of local governments must be withdrawn while M&A to be accelerated.

2013-04-19 10:27:51

In order for China to become the world’s largest shipbuilding country, it is suggested that Chinese shipbuilding industry needs restructuring.
“China hopes to become the world’s largest shipbuilding country by 2015 and actually, it can be regarded as the biggest shipbuilder in dwt terms already, having showed a great progress in production efficiency and shipbuilding capacity over the last few years,” said Jorg Beiler, DNV Vice President and Area Chair for Greater China.  
He pointed out that China’s shipbuilding and offshore industries have been busy for the past three to four years and improved in offshore facility sector even the scale is not that extensive. If Chinese shipbuilding and offshore industries continue on this trend, a very remarkable result will follow, he added.
Regarding an opinion that a restructuring is needed in Chinese shipping, shipbuilding and related industries (demolition business included), he said that China is expecting to maximize profits of the industries through conducting an overall restructuring. Moreover, China has always wanted to meet up with demands from domestic freight and shipbuilding with its own tonnage, however, only large builders can handle the domestic demands while small and medium sized privately-own companies are going through hardships.  
Meanwhile, Beiler added that China has looked for its own strength in changes of global shipbuilding industry and it does not seem difficult for the country to adopt a new technology in the future as currently being equipped with the largest shipbuilding capacity. China is also said to account for 40% in global shipbuilding market and thus, it will soon be able to boast its capacity to the level that Korea and Japan have.

2013-04-19 10:03:56

China is leading the jack-up drilling rig newbuilding market by winning more orders than Singapore.
According to OCBC Bank Singapore, Chinese shipyards have contracted overall $2.3bn of jack-up orders year-to-date, comparing with $2.1bn orders for Singaporean rivals.
OCBC said Shanghai Waigaoqiao Shipbuilding has booked the largest rig orders in China.
The bank pointed out that many of owners who placed orders at Chinese shipyards are speculators and have been attracted to favourable payment terms from China.  
Also, lacking rig building experiences than Singaporean builders, Chinese shipyards seem to gain less profitability, however, it will strengthen up by accumulating experiences.

2013-04-15 09:42:44

According to the report “Global Marine Trends 2030” jointly issued by LR, QinetiQ and University of Strathclyde, China will be the biggest beneficiaries of global shipping by owning over one third of global shipping capacit. Meanwhile, China will be the absolute leader of global shiipbuilding by winning about 28.0m to 32.0m GT new orders more anuually. The future sees so bright while the current situations are a little anxious.
In the firist quarter  newbuilding market has shown mild improvement against the same period of last year, however, global shipbuilding industry still stagnate in the winter season while the new spring has walking closer in China.
Since the beginning of last year, the lagged effects on China shipbuilding has been more and more prominent with new order, orderbook and newbuilding output all decline greatly year on year. Shipyards are began to confronted with delivery dilemma, new order drought and poor margins. Its it estimated that over 300 shipbuilders in China has seen a loss in last year, climing by 150% against last year.
In the past few golden years, China has surpassed Korea and Japan as the leading shipbuilder country globally with three shipbuilding indices topping No.1. However, why “world No. 1” fail to generate profits for ship enterprises?
We think the problem lies in product structure. Chinese shipyards mostly center on major ship types such as bulker, ore carrier and containerships, which are vulnerable to ship fluctuations. Once the shipping market goes down, the profits for shipbuilders will be greatly stricken.
In fact, the global shipbuilding market has been profound changes while we are celebrating our “world No.1”. With global economy development, stricter standards and emerging new technologies, world’s demand has turn to high-tech, high value-added vessels such as LNG carriers, special ships and offshore plants. Besides, the importance attached on green design, safety and environmental friendliness has been much more higher nowadays.
On the other hand, Japan and Korea have walked earlier and faster on the way of developing new technology after master market changes. Japanese shipyards have successfully developed some eco-design, high value-added ships while Korean and Singapore shipbuilders have occupied over 50% of global offshore market. All of them are in better conditions than our China shipyards.
Chinese shipyards would have to change the wheel for their voyage for current survival and long-term development. On one side, shipyards should change product structure and realize transformation by developing technologies and strengthening innovation. On the other side, shipbuilders should choose there right products according to their advantages and grow as the leader of segment market.
As usual, difficulties always brews more opportunities. More ship enterprises and design institutes are trying to find new cooperation partners in the recession. It is a good opportunity for Chinese shipbuilders to enhance independent core technology by the cooperation with advance ship companies in America and Europe.
Diversified development is another way for Chinese shipyards in market downturn. They can take advantage of their competitiveness in equipment manufacture to develop multiple business.
China still has a long and bumpy way to go to become the real No.1.

2013-04-12 10:33:42

New order intakes of Chinese shipbuilding industry for the first two months in 2013 showed a slight rise against the same time period last year.
According to Northeast Securities of China, China’s newbuilding deliveries in January and February were reported to be a combined of 5.69m dwt, down by 20.9% against the same period of 2012, however, it showed a 1.9% increase in new orders to be 5.03m dwt. As of the end of February, an orderbook of Chinese shipbuilders was a total of 106.29m dwt which represents a fall by 27.4% from the same period last year and 0.6% of decrease against the end of 2012.
Newbuilding prices in January and February suggested by three countries, Korea, China and Japan, generally stayed at the similar level and thick plate prices has shown an increasing move since last December.
As for major new orders contracted in offshore segment in February, China’s Dalian Shipbuilding Industry (DSIC) put pens on a contract for $460m worth of two jack-up drilling rigs with two options with Norway’s Seadrill in a Heavy-Tail payment.
Meanwhile, COSCO Shipyard Group won a semi-submersible drilling platform from Singapore’s Energy Drilling.

2013-04-07 13:24:48

While China’s listed shipbuilders continuously released 2012 annual reports mostly with plummeted earnings, showing a recession trend, stock prices of shipbuilding and related corporations increased by 1.98% on April 3, after hearing that many of government ministries of China are planning to release the action plan in shipbuilding industry for the latter three years of China’s 12th five-year development plan.
In 2012, Chinese shipbuilding industry saw an economic index decline and a total amount of ship exports fell for the first time in 30 years. Moreover, some small and medium sized companies were under a threat of bankruptcy that the industry has confronted the most serious situation since the global economic crisis.  
Accordingly, Chinese government has decided to release a policy regarding an active support for the development of domestic shipbuilding industry that it will encourage acquisitions and mergers among related corporations, lessen an oversupply and improve industrial concentration. Furthermore, it will enhance the ability in overall offshore development and urge for the usage of Chinese-built equipment and so on to push forward establishing complementary industrial cluster.
Recently, as not a few shipbuilding-related corporations have faced a “financial difficulty”, the government plans to offer a substantial financial support on the issue as well.
Moreover, last year, Korean and Japanese shipbuilding industries’ succeeded in creating profits in greenship, reinforced with energy-saving, safety and eco-friendly features, offshore facilities and high-specification & high-value vessel segments. Considering this, China, also, is to aggressively spur into R&D of its core technology, planning to advance into high-value, eco-friendly ships and deep-sea offshore sectors.  
According to statistics from almost the whole industry, new orders to be placed at Chinese shipbuilding industry are expected to be on the increase this year by a fixed quantity, against the previous year. China’s Shenyin & Wanguo Securities, also, has anticipated that new orders to be won in 2013 will be more than last year’s as global newbuilding orders begin to grow, comparing with the same time period of last year.

2013-03-11 14:41:59

Shipbuilding industry in Jiangsu province is reported to still have showed a low level of newbuilding orders in February, 2013.
Accordingly to data released on March 4 from Jiangsu Economic and Information Technology Commission of China, shipbuilders in the region are said to win not many orders in the full month of February and they are still struggling.  
As a representative region for maritime economy in China, Jiangsu province attributes lack of orders to global decrease in newbuilding order due to a protracted slump in shipping industry.

2013-03-11 14:18:29

Zhoushan city of China was reported to have shown a surprising surge in newbuilding orders in January and February, 2013.  
According to a local industry source, shipbuilders in Zhoushan are said to win orders for up to about 60 vessels of more than a combined 1.8mDWT in the first two months of this year.  
Especially, of which, proportions for offshore vessels/facilities and high value vessels took somewhat a large part of total.
For instances, COSCO (Zhoushan) Shipyard was awarded orders for four Platform Supply Vessels (PSV) with one offshore Pipe-laying Vessel and one 150,000DWT shuttle tanker while Sinopacific Offshore & Engineering won $250m worth of one offshore supply platform and Zengzhou Shipbuilding was placed an order for CNY 400m ($60m) worth of two 6,000㎥ suction dredgers.

2013-03-11 09:17:27

Last year South Korea lost its decade long battle with China to retain its lead in ship building. Because of a five year depression in the world market for shipping, South Korean ship exports fell 30 percent last year, to $37.8 billion. China, helped by government subsidies, saw ship exports fall only 10.3 percent, leaving China with $39.2 billion in export sales. The Chinese government has also been giving its ship builders lots of new orders for warships, which made its yards more profitable and better able to beat South Korea on price. The Chinese government also provides its ship builders with more loans, allowing the builders to offer better credit terms to customers. South Korea is still ahead of China in total orders for ships. As of last year South Korea had 35 percent of these orders versus 33.3 percent for China.
China has been helping its shipyards for over a decade and that has enabled Chinese ship builders to gradually catch up to South Korea and Japan. It was only four years ago, sooner than anyone expected, that China surpassed South Korea as the world's largest shipbuilder in terms of tonnage. In late 2009, Chinese yards had orders for 54.96 million CGT of ships, compared to 53.63 million CGT for South Korea. Thus China had 34.7 percent of the world market. In 2000, South Korea took the lead from Japan by having the largest share of the world shipbuilding market.
CGT stands for Compensated Gross Tons. This is a new standard for measuring shipyard effort. Gross tons has long been used as a measure of the volume within a ship. CGT expands on this by adding adjustments for the complexity of the ship design. Thus a chemical tanker would end up with a value four times that of a container ship. China is producing far more ships, in terms of tonnage of steel and internal volume, than South Korea, mainly because a much larger portion of Chinese ships are simple designs. South Korea has, over the years, pioneered the design, and construction, of more complex ships (chemical, and Liquid Natural gas carriers.)
Note that deadweight tons measure the actual weight of everything carried in the ship, including supplies, miscellaneous equipment, fuel, and even crew, expressed in long tons: As a rule for every 1,500 deadweight tons a cargo ship could carry about 1,775 measurement tons. Warship tonnage is measured differently, in terms of "displacement tons." Each cubic meter (35 cubic feet) of sea water displaced by the vessel is a "displacement ton." As that volume of sea water actually weighs approximately one long ton, displacement gives a rough indication of the actual weight of the vessel.
China has invested much money and effort into expanding its merchant shipbuilding industry, as a way to improve its warship building capability. Seven years ago, China produced about a quarter of the world's merchant shipping, while South Korea was in first place, producing about a third. It was then believed that China would take first place in the next 5-10 years.
The big thing holding China back in the warship building area has been the shortage of skilled personnel. By encouraging merchant shipbuilding, the government creates experienced ship builders for the more complex task of building warships. In most cases, merchant ships are larger than warships, and much less complex. For example, a common type of merchant ship is the VLCC (Very Large Crude Carrier) of 300,000 deadweight tons (DWT). This is the largest size tanker that can use the Straits of Malacca to carry oil from the Persian Gulf to East Asia. These ships haul over two million barrels (about 290,000 tons) of oil per trip. These ships are larger than the biggest American aircraft carriers (like the Nimitz class that are 110,000 tons displacement, and nearly 354 meters/1,100 feet long.)
The major difference between merchant vessels and warships is what equipment they have. Merchant ships are quite basic and plain. A 300,000 DWT VLCC is about the same size as a Nimitz class carrier, but costs much less to build ($130 million for the VLCC, versus over $4 billion for the carrier). Actually, it costs more to run a carrier for one year, than the VLCC costs to build. Part of that has to do with crew size, with the carrier having a hundred sailors for everyone needed to run the VLCC.
By building all those merchant vessels, China has acquired the ability to build the basic warship hull. Where it has big problems is in creating the complex electronics, mechanical systems and weapons needed to make a warship work. China is making progress there as well, but not nearly as much as it has in the ship building area.
China grabbed the lead in market share for commercial shipping partly because it became more difficult for South Korean builders to expand. There were more restrictions on land use in South Korea, in addition to higher labor costs. South Korean builders, seeing that they could not match the expansion of Chinese ship yards, expended more effort on building more complex, and expensive, ships. Japan was following a similar path when it lost the lead to South Korea a decade ago. China also gained more market share by offering generous loan terms to foreign buyers of Chinese ships, and cheap loans for their own shipbuilders.

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