Monday, June 15, 2009
Chinese ship yards loosing steam
Monday, 15 June 2009
A report issued by China Association of the National Shipbuilding Industry, China's shipyards continue to scrape along with continuing declines in new business and growing risk of cancelled orders. The industry began losing steam in the second half of 2008 and business in the first four months of this year also ebbed new orders placed with 70 key shipyards in China decreased by 96%YoY to 640,000 deadweight tonnes.
The report said order cancellations have spread to more yards. From January to April 28th vessels totaling 1.15 million DWT were canceled, almost twice the number of new orders in the same period. In April 12th vessels totaling 250,000 DWT were canceled in a single month.
Mr Zhang Guangqin president of CANSI said "The gloomy situation will last for a long time. He said that shipbuilding is closely related to global trade and the shipping industry. Currently I haven't seen many signs indicating recovery of the shipping industry. I guess shipbuilding will not recover until two to three years later."
Mr Zhang said the situation at private shipyards is no better than at State-owned enterprises. Among the vessels canceled during the first four months, two thirds or 50% of total tonnage hit private companies.
Ms Zhu Xuesong general office member of CSIC said "Although our existing orders haven't been canceled, the status of new orders is very bad compared with the same period last year."
Ms Zhu said during the first four months, CSIC did not receive any orders for oil tankers, container ships or bulk cargo carriers, the three main types of vessels built at China's shipyards. The company only received orders for ocean engineering projects and ocean administration ships. She said that "Shipbuilding is a long-lasting process and the impact from a decline in orders always lags. If such situation continues, production will be greatly affected in the future."
Ms Zhu said other shipyards are also searching for solutions. He said that "CSIC is now putting more effort in developing non-shipbuilding businesses such as wind power, railway machinery and other sectors our technologies can be applied to.”
The report by CANSI forecast that demand for oil tankers, container ships and bulk cargo carriers will remain very low during the next several months.
An analyst with Ping An Securities said "Raw materials such as steel plate for the ships built in the first quarter were purchased at the beginning of 2008. At that time the price of materials was high and that is the main reason for the decline in profit. He estimated that the company's profit will not increase until the third quarter of this year.”
He said growth in yearly profit for the company will reach about 20% in 2009, a sharp decline compared to 2008, when its net profit surged 48.63% over 2007.
Liaoning Marine & Offshore Industrial Park Co Ltd, a leading private shipyard in the province, had nine vessels totaling 260,500 DWT canceled since 2008. The company has four vessels under construction that will be completed by the end of the year. Mr Sun Jimin general manager of the company said "We haven't received any new orders so far. It is our top priority to look for new orders in 2009."
Guangzhou Shipyard International Co Ltd another listed company of CSSC plans to increase the percentage of ships for ocean exploration and offshore oil production to 30% of the total ships it builds, because profit from such ships is higher.
Source: China Daily
