MYSTEEL: Chinese shipbuilding braces for NCP hit in ‘20
Source: Mysteel
Feb 13, 2020 17:15
“Over 90% of new vessel orders secured by China’s shipbuilders are from overseas ship owners,” the report explained. “It will take a while to control the virus, thus ship owners are questioning whether Chinese shipbuilders can deliver new vessels on time,” it said. The concerns centre around the availably of shipyard workers – some of whom are still required to stay at home to prevent the contagion’s spread – and ongoing delays in the manufacturing and delivery of ship components and materials.
“The virus-related restrictions on road transportation have interrupted the supply of raw materials such as shipbuilding plate, which has also slowed down the yards’ operations,” the report’s compilers pointed out.
The report added that some foreign ship owners are thinking of turning to Japanese and South Korean shipyards, a view supported by a Shanghai-based industry expert. “I’ve heard that an Italian ship owner is approaching Japan’s Mitsubishi Heavy Industries and is considering entrusting them with a ship-repair project,” he told Mysteel Global.
The NCP outbreak has hurt ship owners’ faith in China’s shipbuilders, and even if the virus is controlled and shipyards resume normal operations, fulfilling their new vessel orders target for 2020 will be very hard, according to the report.
The virus will have a negative influence on China’s economy and even the global economy, and seaborne trade and shipping markets will also feel affected, especially in China, according to Bao Zhangjing, the vice president of China Institute of Marine Technology and Economy.
“Thus, we have lowered our expectations on new vessel orders placed globally for 2020 from 75 million dead weight tonnes to 67.5 million dwt,” Bao was quoted by China Ship News as saying.
According to calculations made by the China Association of the National Shipbuilding Industry, new vessel orders which global shipbuilders received last year totalled 64.4 million dwt.
On the other hand, delivery delays have exerted pressure on Chinese shipbuilders’ follow-on production. “Before the NCP outbreak, the implementation of new policies aimed at reducing sulfur emissions from marine engines starting this January had already encountered difficulties in the installation of desulfurization equipment and other technology, leading vessel deliveries to slow down,” the report observed. “The virus has made it worse,” it said.
Shipbuilders can secure documentation from related organizations enabling them to declare ‘force majeure’ on contracts because of the virus, so as to avoid having to pay compensation to customers and to prevent order cancellations, the report stated. However, the builders’ operations are still under huge pressure, it acknowledged.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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