According to the report from China Association of National Shipbuilding Industry (CANSI), new orders secured by Chinese shipyards in H1 of 2011 fell by 9.2% after three-year retaining the crown of global shipbuilding industry. The post-crisis effects on shipbuilding industry are turning up.
In the first half, national shipbuilding industrial output value and newbuilding output continued increasing momentum due to the unprecedented prosperity of shipbuilding industry before the financial crisis. However, declining demand, falling price after the crisis began to shadow on Chinese shipbuilding industry. The new orders volume and orderbook at hand both saw downturn in the first six months. Over half of the shipyard under CANSI supervision received no order in the period.
Chinese shipbuilding industry is currently facing severe challenges of declining international demand and weak core competitiveness.
Since the beginning of this year, Chinese shipyards have been confronted with bearish bulker and tanker newbuilding market which is traditionally dominated by Chinese. Besides, the increasingly overwhelming advantages of Korean shipbuilders in large containerships, drilling ships, LNG carriers are putting Chinese opponents in more unfavorable conditions.
Statistics show that newbuilding price has dropped by 30-40% since the financial crisis. Moreover, yuan appreciation, increasing labor cost and rising material prices also further squeeze the profits for Chinese shipbuilders.
Conditions are only expected to be worse in second half of the year.
According to the analysis from CBRC (China Banking Regulatory Commission), in July Chinese shipyards total newbuiding output came up to 7.53m dwt while new orders only stood at 1.98m dwt.
Polarization of Chinese shipbuilding industry is intensifying.
These big players are gaining more market shares with more orders. On the contrary, those weak ones are continuing to be idle without winning any orders.
The contrast between the rising newbuilding output and the declining new orders is also growing more obvious. In the first seven months, national newbuidling output added up to 38.46m dwt, rising by 9.3%. While total received new orders only totaled 23.58m dwt, falling by 29.2%. More and more berths are becoming idle.
Experts in CANSI put forward that it is the time for Chinese shipbuilding industry to make over by survival of the fittest.
As Liang Xiaolei, CEO of Sinopacific Shipbuilding made bold to predict a year ago that: “About 80% of Chinese shipyard will face zero order in the next year. Of the rest 20%, 15% could survive by just enough orders. Only 5% high-value-added enterprises would become better and better in the harsh situations after crisis.” Private-owner shipyard Rongsheng verified the predication by gaining 30 new vessels in the period which including 24 bulkers and 6 containerships, occupying 21% if national new order total.
Optimistic insiders say that buyers are more willing to pay high price on the most excellent resources after the crisis. This means that outstanding shipyards are embracing better days ahead.
On the international shipbuilding experts prediction conference held in Japan this July, representatives from all over the world reached an consensus that new vessel demand in the next 10-20 years would fall back compared with the previous ten years. However, with strong growth of global container throughput, demand for containership may face more optimistic situations.