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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.

2013-03-01 09:36:27

Korean shipbuilders were outperformed by their Chinese competitors in exports last year, 11 years after Korea in turn overtook Japan in 2001.
The Korean Chamber of Commerce and Industry said analysis of data from the Korea International Trade Association puts exports by Korean shipbuilders at US$37.8 billion in 2012, compared to China's $39.2 billion.
The change is due to the fact that Korea was more affected by the global downturn than China. Korean shipbuilders saw exports decrease around 30 percent on-year in 2012 while their Chinese and Japanese rivals posted drops of only 10.3 percent and 14.6 percent.
The shipbuilding industry has been one of Korea's mainstays. Since the mid-2000s, it enjoyed a boom and grew to post $54.1 billion in exports in 2011. But China has lately been putting up strong fight. Korea managed to edge slightly ahead of China in terms of global orders last year, when it accounted for 35 percent compared to China's 33.3 percent.
Industry insiders cite Chinese government support as the reason for the rapid growth of Chinese shipbuilders despite shortcomings in technology.
The KCCI in a report to the Ministry of Strategy and Finance called for support from the banking sector to overcome the current slowdown. It said such support is all the more necessary because of a shift in payment practices. Before, the total price was paid in five installments of 20 percent each time until delivery, but now only 40 percent of the total price is paid in four installments during manufacturing and the remaining 60 percent on delivery.

2013-02-18 11:14:53

As global shipping industry see growing deficits, which has caused serious damage to the shipbuilding industry, several institutes and associations, such as the Ministry of Industry and Information Technology of China (MIIT), are said to have negative lookouts on Chinese shipbuilding industry.

MIIT has announced at the end of January that a total amount of delivery by the Chinese shipbuilding industry in 2012 was 60.21m DWT, showing 21.4% decrease year-on-year, with 20.41m DWT of newbuildings contracted which have fallen by 43.6%. Also, China’s newbuilding orderbook marked 106.95m DWT last December with 28.7% fall compared to a year earlier and of the total, vessels for export turned out to have accounted for 82.7%.

Moreover, China Newbuilding Price Index (CNPI) has been on a steady downward curve since July 1st, 2011 when it made its first announcement of the index. Particularly, dry bulk price index has fallen continuously by 15% from 1,000p and finally recorded 841p on December 30th, 2012.  An official from the company has pointed out that the industry has faced a serious hardship due to a fact that proportion of bulker building takes around 70%.

Meanwhile, Zhang Shou Guo, executive vice chairman of the China Shipowners’ Association, has said that he does not think 2013 will be better than 2012 and the Chinese shipyards will experience even a harder time in 2014. Also, Yangzijiang Shipbuilding’s chairman Ren Yuanlin has expected that this year is a starting point for the shipbuilding industry to face a hardship and thus, it will be difficult to come out of recession for the next five years. Another professional in the industry is said to have forecasted that around 50% of the Chinese shipyards will go into bankruptcy within the next two or three years.

2013-02-06 09:37:40

According to statistics published by the Ministry of Industry and Information Technology recently, completion volume of China's shipbuilding amounted to 60.21 million DWT in 2012, down 21.4 percent year on year, and new shipbuilding order quantity was 20.41 million DWT, down 43.6 percent year on year. The sharp shrinking, about 20 percent reduction of order completion and more than 40 percent decrease of new orders, reflects the difficulty of the shipbuilding industry in 2012.
As a matter of fact, the shipbuilding industry was the first to feel the chillness in as early as 2008. At that time, with the sluggish global ship market and the impact of the European Debt Crisis, most Chinese shipbuilding companies suffered significant order reduction and price cut. According to the latest statistics published by the Ministry of Industry and Information Technology, as of the end of December 2012, quantity of orders in process was 106.95 million DWT, 28.7 percent lower than that at the end of 2011; of the order, 36 million compensated gross tonnages were seagoing vessels, and export vessels accounted for 82.7 percent of total.
The shipbuilding industry is an important part of the real economy, directly linked to the development of such key industries as iron and steel, petrochemical, equipment manufacturing, and electronic information. In 2012, judging from the development of the 20 major industries of China's real economy, production of raw materials industries, including iron and steel, nonferrous metals, construction materials, and chemicals, remained anemic, overcapacity stood out, and some industries were on the edge of loss. With the impact, as well as the continuous depression of the international shipping market, transaction volume of new ships in the international shipbuilding market has continued to shrink up till now. Besides, a great deal of the orders of China's shipbuilding companies come from Greece and other countries and regions that are heavily stricken by the European Debt Crisis, and the quantity of many company's international orders has dropped sharply.
In 2013, as there are less orders in hand, shipbuilding enterprises will compete more violently for new orders, which would force ship price to go further downward. Although the global economy can be expected to hit the bottom in 2013, excessive shipping capacity may stand in the way of new order recovery. Leading enterprises in China have also felt the huge pressure. In their views, the shipbuilding industry is almost hitting the bottom now; there will be a reshuffle across the industry, and half of the world's shipyards may go bankrupt, shut down, or be merged.
There is still a long way to go before the shipbuilding industrial chain can restore its vitality. Until then, policy support and guidance will be the main driving factors. The central economy work meeting held recently proposed to make full use of the reversed pressure mechanism formed during the international financial crisis to solve the problems of excessive production capacity. It is told that numerous government ministries and commissions are studying and formulating the Action Plan of the Shipbuilding Industry in the Last Three Years (2013-2015) of the 12th Five-year Plan. The government will provide support to key enterprises in such aspects as finance, banking, and tax.
Meanwhile, construction of marine economy demonstration areas across the country will also bring more opportunities to the shipbuilding industry. The publishing of the Development Plan of Shandong Peninsular Blue Economic Zone, Planning of Zhejiang Marine Economy Development Demonstration Area, and Development Plan of Guangdong Marine Economy Comprehensive Experiment Area will vigorously boost the development of China's marine economy and create new opportunities for the development of the shipbuilding industry. Also, the establishment of China Development Bank's Shipping Finance Center is also regarded as a major beneficial factor. It is CDB's first head office business department that provides support to a specific key industry. CDB will make use of this shipping finance center platform, adopt mid- to long-term financing and investment approaches, and give play to the unique advantages of development financing to boost the development of China's shipping and shipbuilding endeavors.
Industrial insiders suggest that the government has made it clear to increase support to the development of key industries during the 12th Five-year Plan, and the prosperity of the marine economy will present new market opportunities for the diversified operation of the shipbuilding industry. Demand mix of China's shipping market is changing, and there will be demands of certain sizes for LNG vessels and marine engineering equipments, eco-friendly vessels and special-purposed vessels, ocean fishing vessels, and large coastal and inland waterway vessels. Shipbuilding enterprises should grasp the opportunity of the bottom adjustment of the industry, improve independent innovation, develop new products that meet market demands, promote industrial reshuffle, and get ready to set sail once again.

2013-02-05 14:25:44

The large-scale order plan of the Chinese government for Very Large Crude Carrier (VLCC) is getting materialized in accords with its policy, “Chinese oil must be shipped by Chinese shipping company.”  
Up to the present from the end of last year, a total of 18 vessels (including the eight options) were ordered and the industry eyes on it if it can reach its aim, 50 vessels.
Dalian Shipbuilding Industry (DSIC) of China, a subsidiary of China Shipbuilding Industry Corporation (CSIC) is said to have been placed an official order for five VLCCs from the state-run China Merchants Energy Shipping (CMES) on February 1. CMES said in a regulatory filing that it signed a newbuilding contract for three environmental-friendly 319,000DWT VLCCs plus two options with DSIC.
The newbuilding price is said to be approximately $85m per a ship and the delivery is scheduled between December, 2014 and the first half of 2015. The two options are said to be due within six months to come with the same price.
The state-run shipping company said that the price for the three vessels (Hull No. T300K-58, T300K-59 and T300K-60) will be provided in the form of the combination of the private placement of stock and the shipping finance.
The payment condition is that the 10% of the total price is paid four times with three intervals in advance and the remaining 60% is paid at the delivery. This is a much eased than the harsh ‘Heavy-Tail’ way (the 10-20% paid in advance and the remaining 80~90% to be paid at the delivery) which is common due to the recession in shipbuilding industry.
CMES added that the new VLCCs contracted with DSIC will be fuel efficient 20% more than their same class vessels built in 2009-2011.
The company with the fleet including 13 VLCCs announced in 2012 that it planned to place orders for up to 10 VLCCs in three years and the industry is expecting the company to sign a contract for three VLCCs with two options within this week with a shipbuilder under the roof of the China State Shipbuilding Corporation (CSSC).
Especially, Shanghai Waigaoqiao Shipbuilding (SWS) has unofficially been placed an order for three VLCCs with two options from CMES through its subsidiary, Shanghai Jiangnan Changxing Shipbuilding, for around $85m per a vessel with the payment planned at the end of 2014~2015.
Meanwhile, last December, Dalian Ocean Shipping Company (COSCO DALIAN) of COSCO group signed a contract for two VLCCs with two options for $80m per a vessel from DSIC and the COSCO’s company placed an order for two VLCCs with two options from Guangzhou Shipyard International of CSSC.

2013-01-30 11:49:22

Shipbuilding and shipping market experts in China prospected that shipping market would mildly improve this year and about a total of 60m-75m dwt newbuildings would be invested in the world, amid protracted stagnant global economy, newly adopted regulations in the industry, declining newbuilding delivery and lower newbuilding prices, etc.
Also, they predicted that LNG carrier, LPG carrier, car carrier, chemical tanker, etc., would take center stage, as well as offshore market. More shipbuilding and shipping players would concentrate on developing eco-friendly technologies.
Due to shrinking orderbook and falling newbuilding prices but rising cost of production, China's shipbuilding and its related industries economic indexes would maintain their downtrend this year.
In 2013, newbuilding delivery is predicted to stay at around 55m dwt and new order to slightly grow, while orderbook would drop under 100m dwt.
Chinese market players suggested local shipbuilders builds up new growth engine with changing demand, eye niche market through structural upgrade, improve ship quality. Also, they proposed to improve China's competitiveness by tightening international cooperation and diversifying product portfolio.

2013-01-29 14:11:28

China's 1,647 shipbuilding-related companies over a certain size recorded total production value of completed products in 2012 increased by 3.4% year-on-year to CNY 790.3bn ($127bn).
Shipbuilding industry saw its production value of completed products declined by 0.1% against the previous year to CNY 595.1bn, while production values of ship equipment, ship repair and ship conversion industries stood at CNY 113bn, CNY 18.1bn and CNY 31.7bn, up by 15.1%, 11.6% and 23.6%, respectively, according to latest report from the China Association of the National Shipbuilding Industry (CANSI).

2013-01-28 13:38:48

Chinese shipbuilders delivered overall 60.21m dwt (19.01m cgt) in the full 2012, which saw 21% decrease on the previous year, while they contracted a total of 20.41m dwt (8.69m cgt), declined by 44% year-on-year.
China Association of the National Shipbuilding Industry (CANSI) announced its yearly report on January 25 and said Chinese shipyards' newbuilding orderbook as of the end of December 2012 stood at 106.95m dwt (36m cgt), down by 29% year-on-year.
As for export ship, in particular, delivery dropped by 21% year-on-year to 49.49m dwt, new order plunged by 46% to 14.96m dwt and backlog was reduced by 35% to 88.44m dwt.
Meanwhile, a total of 1,647 shipbuilding-related companies over a certain size saw their total revenues, during the first 11 months of last year, declined by 0.2% year-on-year to CNY 616.2bn - shipbuilding industry decreased by 4% to CNY 456.8bn, ship equipment increased by 17% to CNY 94.9bn and ship repair up by 9% to CNY 13.5bn.
During the same period, as for profits, shipbuilding industry recorded CNY 22.5bn, plummeted by 35%, while ship equipment rose by 2% to CNY 4.4bn and ship repair saw CNY 90m loss.
Especially, a total of 323 companies in shipbuilding, ship equipment and ship repair industries saw the red, with total amount of losses expanded by 2.6 times.

2013-01-28 10:32:21

Fujian province expects to have the ability to build more than 8 million deadweight tons of ships each year, by the end of 2015, and to earn 70 billion yuan ($11.26 billion) for its effort, and that is just one of the goals of a recently announced Fujian provincial government plan.
The government’s “11 Measures to Transform and Upgrade the Shipbuilding Industry” calls the province to develop into an important shipbuilding base on the southeast coast of China within three years, by raising its national industrial status and technological level.
It is expected to get close cooperation from four industrial zones - Sansha Bay, Minjiang River Estuary, Meizhou Bay, and Xiamen-Zhangzhou Bay – which will work to develop two or three major enterprises that can produce one-million-DWT ships each.
The planners will evaluate production conditions and encourage the use of more modern methods and technical and R&D centers above the provincial level, which need new research equipment, can receive funding.
The province will accelerate construction work on key projects, including Mawei Shipbuilding Heavy Industries, on the Minjiang estuary, while key provincial projects will enjoy some assistance in use of sea area.
There will also be an extension of a 30-percent property and mortgage subsidy for shipbuilders, covering ships under construction, berths, and large machinery, while the financial guarantors of small enterprises can receive rewards depending on the amount of the guarantee.
Key projects will also be given priority in access to land, shoreline, sea area, and forest use and there will be subsidies for bringing in talented personnel or teams along with other policy support.

2013-01-28 09:59:25

According to a report released by the China Association of the National Shipbuilding Industry (CANSI) on January 25, due to fewer orders held, the lower price of completed ships, and higher production costs, China’s shipbuilding industry is expected to continue to perform poorly this year. Approximately 55 million dead weight tons (DWT) of ships are expected to be constructed, and the number of new orders is likely to increase slightly, but the number of orders held may drop to below 100 million DWT.
Statistics from the CANSI show that over the first eleven months of 2012, shipbuilding enterprises above designated size generated total profit of 28.8 billion yuan, down 29.1 percent year-on-year (YoY). Specifically, the profit from ship construction was 22.5 billion yuan, down 35.3 percent YoY, the profit from ship supporting was 4.43 billion yuan, up 1.8 percent YoY, and the profit from ship repair was negative 90 million yuan, down 134 percent YoY.

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