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2014-08-29 09:15:01

The NGO Shipbreaking Platform has applauded Hamburg-based Hapag-Lloyd for having adopted a new, progressive ship recycling policy, something that is likely to bring plenty of business for China’s recyclers. The German shipping company will now only seek “sustainable solutions for green ship recycling”.

“While previously our second-hand ships were used for a longer time by their new owners after we had sold them, we recently had to realize that buyers had passed on the ships more and more rapidly for demolition, in particular to ship breakers who use the beaching method. As this method of shipbreaking does not fulfill Hapag-Lloyd’s strict criteria for workers’ safety and environmental protection, we ourselves will in the future monitor and supervise the professional recycling of ships in a certified facility following the requirements of the Hong Kong Convention”, a Hapag-Lloyd spokesperson told the NGO.

Already, Hapag-Lloyd has decided to sell the New Orleans Express to a ship recycling facility in China. China does not break up ships via beaching, opting instead to dry dock them and take them apart in a more systematic manner.

2014-08-26 10:32:47

China Association of the National Shipbuilding Industry (Cansi) has urged Chinese shipyards to stay on the path of moving up the value chain and streamlining operations, if the country is to become the world’s leading shipbuilding nation.

Zhang Guangqin, president of Cansi, believed that while Chinese yards have the potential to raise their competitiveness globally, they would have to upgrade and develop appropriately.

“During the last 10 years of rather rapid growth, our shipbuilders have achieved a significant milestone. Chinese yards are now able to build 8,000 teu and above containerships, and yards are equipped with berths of 10,000 dwt and above as well as close to 800 shipping docks,” Zhang was quoted saying.

However Zhang pointed out that there is no need for Chinese yards to continue expanding their capacity for growth.

“Capacity infrastructure has reached its peak. Chinese yards should no longer rely on past business strategy of investing to expand capacity and assets,” Zhang believed.

He added that crucial developments now should be improving value-added services and products, including the capability to construct offshore vessels, specialised vessels and deepwater equipment.

China’s shipbuilding industry is undergoing a consolidation phase to remove the severe overcapacity amid the sluggish shipping market.

Zhang said the consolidation period has removed a consideration portion of excess capacity from the market and the consolidation will continue for the next few years.

2014-08-20 10:46:52

China Association of the National Shipbuilding Industry (Cansi) has urged Chinese shipyards to stay on the path of moving up the value chain and streamlining operations, if the country is to become the world’s leading shipbuilding nation.

Zhang Guangqin, president of Cansi, believed that while Chinese yards have the potential to raise their competitiveness globally, they would have to upgrade and develop appropriately.

“During the last 10 years of rather rapid growth, our shipbuilders have achieved a significant milestone. Chinese yards are now able to build 8,000 teu and above containerships, 10,000 dwt and above berths and close to 800 shipping docks,” Zhang was quoted saying.

However Zhang pointed out that there is no need for Chinese yards to continue expanding their capacity for growth.

“Capacity infrastructure has reached its peak. Chinese yards should no longer rely on past business strategy of investing to expand capacity and assets,” Zhang believed.

He added that crucial developments now should be improving value-added services and products, including the capability to construct offshore vessels, specialised vessels and deepwater equipment.

China’s shipbuilding industry is undergoing a consolidation phase to remove the severe overcapacity amid the sluggish shipping market.

Zhang said the consolidation period has removed a consideration portion of excess capacity from the market and the consolidation will continue for the next few years.

2014-08-06 15:06:42

Shipyards in China are pushing to secure around USD 10 billion worth of new LNG orders until 2020, in an effort to revive the country’s faltering shipbuilding sector.

This latest incentive to form natural gas delivery vessel fleet of their own is aimed at bolstering China’s chances at challenging South Korean and Japanese shipyards that have cornered the large gas tanker building market in recent decades, as Reuters reports.

American Bureau of Shipping (ABS) estimates that up to 50 out of 225 liquefied natural gas (LNG) tankers expected to be built by 2020 are planned for construction in Chinese shipyards, and intended for supplying gas to Chinese ports.

The global shipping industry is reeling from a half a decade of downturn, the worst recorded in last 30 years. China as a leader in building of basic vessels now sees its chance to diversify, and test its mettle in the area of sophisticated shipbuilding.

“In future, our output is going to outstrip that of Japan and Korea,” said Yang Baohe, principal naval architect at the Marine Design & Research Institute of China, a subsidiary of China State Shipbuilding Corporation (CSSC).

Over 70 percent of approximately 125 LNG carriers and storage vessels being built currently have gone to South Korean shipyards, mostly Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries.

On the other hand, these orders make up a little over half of the overall investment of close to USD 50bn necessary to boost the global LNG fleet to 394 vessels.

China is feeling the heat of the urgency to switch from coal to eco-friendlier fuels in an effort to cut carbon emissions, hence its plan to almost triple the total gas supply by the end of the decade.

This shift is seen as a chance for relatively inexperienced Chinese shipyards to enter the LNG market by building vessels for China’s growing needs.

2013-12-03 10:58:15

Engine manufacturer Wartsila is continuing to build up its presence in China as more complex vessels are manufactured by the country’s shipyards.

“From 35 years of success and growth in China we have a long history and presence in China and we are still expanding on that,” Hans Laheji, area sales director for Wartsila Ship Power, told a media briefing at Marintec China 2013 on Monday.

Laheji noted the shift the company was seeing by Chinese yards to building more high value vessels in sectors such offshore marine. “More complex vessels are being manufactured in China,” he said.

Such projects require greater on the ground support and he said: “We have at this about 50 people in project management, engineering and application support here in China to be close to the customers and where the vessels are built.”

Wartsila is also building on its physical presence in China which now consists of two fully owned factories, five joint ventures, eight licenses and eight service centres. “This local presence is very important,” he said.

In June 2011 the company added controllable pitch propeller manufacture to its 55/45% joint venture between Wartsila and CSSC. “We build now the majority of propellers here in China,” Laheji said.

Next year a new site in Zhuhai will start operations in where the company is going to manufacture a range of four-stroke engines with annual capacity of 400 units per year.

2013-08-13 09:28:35

China grew into the world’s leading shipbuilder over the last decade as hundreds of private yards opened to compete with state-run companies. Now, the government is poised to regain control as the industry heads for consolidation.
The number of shipyards in China has swollen to 1,647, contributing to a global capacity glut. To stabilize the industry, one third to a half of the yards will probably have to disappear through acquisitions and closings, according to executives and analysts.
State-run companies are at an advantage because they have easier access to credit to pay workers, buy raw materials and provide financing for clients. China State Shipbuilding Corp., China Shipbuilding Industry Corp. and other government-backed companies won three-quarters of all orders in the first half of this year. Though state companies may buy some private yards, many will likely have to close since their capacity isn’t needed.
“It’s a lost cause for most of the private shipyards,” said Park Moo Hyun, an analyst at E*Trade Securities Korea in Seoul. “The government and even the banks seem to have given up on trying to save some of the troubled private shipyards. What innovations can they come up with when they can’t pay to keep their workers?”
Three-Year Plan
China’s State Council announced Aug. 4 a three-year plan for the industry that included control of capacity. Ship owners ordering China-made vessels, engines and some main parts should get better access to funds from financial institutions and some key companies will be allowed to issue corporate bonds, according to the State Council statement.
Last month, China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s biggest private shipyard, sought financial assistance after failing to win a single vessel order this year.
“China has realized it’s better to have a few big yards under its control and help them become more competitive than have too many,” said Park at E*Trade Securities. “The government is looking for quality now, not quantity.”
China Rongsheng shares fell 1 percent to HK$1.04 in Hong Kong trading today while the city’s benchmark index rose 2.1 percent.
More than half of China’s yards will have to be wound down to cut capacity, according to Ren Yuanlin, chairman of Yangzijiang Shipbuilding Holdings Ltd. (YZJSGD), the country’s second-largest private vessel maker. Of the remainder, only 20 percent will be profitable, he said. China Association of the National Shipbuilding Industry said last month a third of the nation’s yards face the danger of closure in about five years after failing to win orders.
Idled Workers
“It’s very difficult to conduct mergers and acquisitions in the shipbuilding industry in the current market,” said Sarah Wang, an analyst at Masterlink Securities Corp. (2856) in Shanghai. “Big companies can’t win new orders. How would they be willing to do acquisitions?”
The State Council stepped in with its plan a month after Rongsheng said it had a first-half loss and sought government support. Some idled contract workers surrounded the entrance of its main factory in Jiangsu province, the company said July 3.
The yield on a Rongsheng unit’s 2015 onshore bonds rose to 6.9 percent on Aug. 9 even after the State Council’s pledge. Rongsheng on July 31 sold three-year offshore convertible notes at 7 percent to help repay borrowings. By comparison, bonds due 2015 for South Korea’s Hyundai Heavy Industries Co. (009540), the world’s largest builder of vessels, yielded at 2.91 percent.
“Compared with shutting down of companies, mergers and acquisitions will less likely cause social unrest,” said Xu Minle, an analyst at Bank of China International Ltd.
“Less Hope”
Consolidation may help the government achieve a target that the nation’s top-ten yards should account for 70 percent of the total output by 2015. China also aims to have more than 50 brands of different types of ships in that period, according to a five-year plan released last year.
In comparison to that goal, the nation’s top-ten builders accounted for 48 percent of the total output in 2011, according to the latest available data from the industry group. Chinese yards had an order book of 218 million deadweight tons in 2008, overtaking South Korea as the world’s largest shipbuilding nation, according to Clarkson Plc. (CKN)
“The Chinese government wants to support its big state-owned shipyards because they are strategically important,” said Kim Hong Gyun, an analyst at Dongbu Securities Co. in Seoul. “That means less hope for private yards.”
Global ship orders reached a peak in 2007, helped by China’s demand for raw materials. To support the yards, the government also provided low-cost financing for new vessels.
China Vs South Korea
Yards in China won orders to make vessels with a capacity to carry 27.8 million deadweight tons, or 47 percent of global contracts, in the seven months through July, according to Clarkson, the world’s largest shipbroker. State-backed builders won almost three-quarters of those deals, helping the nation gain a 7.8 million-ton lead over South Korea.
Chinese shipyards and related companies employed about 671,564 people in the country in 2012, down from 681,339 in the previous year, according to data provider Beijing Compass-info Consulting Co. Most of the builders are based in Yangtze River Delta, Pearl River Delta and northeastern China. South Korea has 138,248 people working at 65 shipyards, according to its Ministry of Trade, Industry & Energy.
China’s government hasn’t had much success in its efforts to encourage mergers and acquisitions in the steel industry, Wang at Masterlink said. Benxi Iron & Steel Group, owned by a provincial government, and Anshan Iron & Steel Group, controlled by the central government, failed in their bid to merge in 2010, at least five years after authorities initiated the process.
Shipbuilders should be confident as “the potential in the domestic market remains relatively large,” the State Council said. The government also pledged to study securitization of shipbuilders’ loans and authorities will encourage development of offshore engineering equipment such as drilling platforms and large LNG ships.
“Shutting down yards is a hard landing, while mergers and acquisitions is a soft landing,” said Li Yanqing, president of Shipbuilding Information Center of China.

2013-08-12 11:36:22

The Chinese government has released a restructuring measure towards its shipbuilding industry which is one of oversupplying industries, and decided to strictly control the enlargement of production facilities over the next three years.
On August 4, the State Council of China unveiled 'An Implementation Plan for Accelerating Restructuring of Shipbuilding Industry, Industrial Conversion and Upgrading (2013-2015)' to reduce overcapacity seen in the facilities of shipbuilding industry.
According to the governmental plan, the enlargement of production facilities of shipbuilding industry will be strictly regulated by 2015 and yards with poor competitiveness stemming from deteriorated facilities are to go on M&A. Also, falling behind facilities will be disposed following market functions.
Focusing on major large corporations, the government will proceed with merger and grouping of allied shipbuilding companies and regulation of total quantity will be adopted for shipbuilding facilities, aimed at freezing new investment. Meanwhile, small and medium sized yards will be encouraged to change their business into ship repair, scrapping and non-shipbuilding sectors.
Alongside, the State Council of China will give variety to the demand structure of shipbuilding to induce various new contracts for high-end vessels.  With this, the governmental department will realize technological innovation and establish a groundwork for competitive companies to survive, with securing major shipbuilding technologies.
Furthermore, the government is seeking to intensively foster industries of offshore structure, shipbuilding materials and equipment, together with expanding and offering ship financing, such as buyer credit and so on, for overseas owners to purchase ships.

2013-08-09 14:56:54

State support is making a huge difference  in the shipbuilding market, with Chinese yards now having widened their lead over their South Korea rivals, according to wire reports.
In the first seven months of this year, China won 27.8m dwt worth of orders, making up almost half of all global orders, and extending its lead over South Korea to 7.8m tons from 1m tons a year earlier, Bloomberg reported.
Government-backed yards won almost three-quarters of all those deals, up from 52% the year before, it added.

2013-08-09 10:00:08

The State Council recently issued a plan to accelerate restructuring and technological upgrading within China's shipbuilding industry. In 2010, China led the world in terms of shipbuilding volume. But the same cannot be said about the country's ship construction technology or the competitive strengths of its shipyards. Over the years, Chinese shipbuilding has expanded too quickly through repeated investment and the industry is now waterlogged with excessive capacity. This is true across the nautical construction sector - makers of low-end bulk carriers and high-end tankers all face similar predicaments.
A persistent downturn in the global shipping market hasn't helped matters either. With few signs of relief on the horizon, it is critical to establish a stable, sustainable and orderly ship making environment. After all, Chinese shipyards are major buyers of industrial products such as steel, iron and heavy machinery. They also supply vital assets to several of the country's largest industries, including offshore oil and gas producers.

2013-08-07 09:42:50

China widened its lead over South Korea as the world’s biggest shipbuilding nation as state-backed yards won contracts for complex gas-carriers while private facilities in the country struggle for funds.
China won orders to make ships with a capacity to carry 27.8 million deadweight tons, or 47 percent of global contracts, getting a 7.8 million-ton lead over South Korea in the seven months through July. A year earlier, the gap was 1 million ton.
Government-backed yards won almost three-quarters of all those deals, an indication that securing funds isn’t an issue for them. That contrasts with China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the nation’s biggest private shipbuilder, which last month sought government assistance after failing to win any ship order this year. China announced a three-year package for the troubled industry this week.
“China is trying to grow its state-owned yards to help them become more competitive against their rivals in South Korea,” said Park Moo Hyun, an analyst at E*Trade Securities Korea in Seoul. “This is going to mean that most of the financially-troubled private shipyards won’t get much help.”
Hyundai Heavy Industries Co. (009540), Samsung Heavy Industries Co. and other yards in South Korea won orders for 20 million tons of ships, according to data provided by Clarkson Plc. (CKN) Globally, companies placed orders for 59.6 million tons of ships as of the end of July.
State-backed companies grabbed 74 percent of new orders in China in the first half of this year, according to UOB-Kay Hian Holdings Ltd. (UOBK) That compares with 52 percent in all of 2012.
Gas Carriers
Of the orders for 33 large vessels that went to state-backed Chinese yards, Hudong Zhonghua Shipbuilding Group Co. won a contract earlier this year to build six liquefied natural gas carriers from China Shipping Development Co. Cosco Dalian Shipyard received an order to build one LNG vessel.
China issued a three-year plan earlier this week to urge financial institutions to support the industry. The government also wants the industry to control new capacity and promote high-end products.
Rongsheng reported last month it had a net loss in the first half and said it was seeking financial support from the government and shareholders after a plunge in orders strained cash flow. The company has also agreed to issue convertible bonds to raise a net HK$1.38 billion ($178 million) for working capital and to support the development of its offshore engineering business.
Ship owners placing orders for China-made vessels, engines and some main parts should get better funding and some key companies will be allowed to issue corporate bonds, the State Council said in a statement released Aug. 4. Chinese shipbuilders don’t have strong innovation, according to the statement dated July 31.
China may have a third of its more than 1,600 yards shut down in about five years, according to Wang Jinlian, head of the industry association. The sector is among those including iron and steel, cement, electrolytic aluminum and flat glass that must accelerate the phasing out of overcapacity, according to the Ministry of Industry and Information Technology.

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