In an interview with Lianhe Zaobao, Ren Yuanlin, president of Yangzijiang Shipbuilding (Holding) Ltd pointed out that global ship industry is unlikely to go worse and the market is likely to see recovery till 2016 weighed by BDI (the index is estimated to recover to 2200 points until 2016) for most ship enterprise can make money when the index is over 2000 points.
According to Ren, more ship-related companies will collapse if the market continues the downturn. However, he also says that the market will not turn better in short terms. For once the market shows any signs of recovery, interested buyers will hurry to buy more ships given current low ship price and financing cost.
Nevertheless, Ren is rather positive about the market outlook, “the market is destined to get better as long as the sea exists, and profits are available as long as ships sail on the sea.”
In the peak season in 2007 and 2008, even the real estate developers were trying to set food into newbuilding sector. A new-built vessel with construction value of $30.0m can be resold at a price of $80.0m. Numerous investors flooded into shipbuilding industry attracted by fascinating profits. However, recent slump in shipping industry has directly affected shipbuilding industry and global new orders have been at the lowest level over the last five years. Yangzijiang’s four newbuilding contracts are also reported has been cancelled recently.
Ren reveals that the company will start building its first jack-up drilling rig in June this year which is to be delivered in the first half of 2015. Besides, the company is planning to raise its operating profit in offshore segment to 20% of a total profit in three to five years.