UTC+8 ( BJT)

China’s Jan-Aug new ship orders down 4.5% on year

China’s shipbuilders received new vessel orders totalling about 15 million dead weight tons (dwt) over January-August, or down 4.5% on year, according to the latest data from the China Association of the National Shipbuilding Industry (CANSI), there was a slight improvement from the 4.8% on-year drop for the first seven months, but the concern persisted on the insufficiency of the backlog.
Among the total, about 13.6 million dwt or 91% were for exports, which went down by 6.6% on year, which was also less steep than the 7.7% on-year decline over January-July, according to the CANSI data.

“The pandemic has largely slashed new (vessel) orders, but the Chinese shipbuilders have been delivering the new ships at a rather steady pace, which means that the backlogs at the builders have been decreasing, especially those for bulk and container carriers,” an Shanghai-based industrial source shared with Mysteel Global.

The CANSI statistics showed that China finished building vessels totalling 24.1 million dwt in the first eight months, down 7.1% on year, and the volume was much higher than the new orders.

By the end of August, the Chinese shipbuilders held a backlog totalling 72.6 million dwt, down 8.2% on year or 11.6% lower than that by the end of 2019, according to the CANSI statistics, and among the total, exports accounted for some 66.9 million dwt or 92.2%, down 7.1% on year. 

The Chinese shipbuilders need to maintain their backlog at about 80 million dwt for the stability in operations, Mysteel Global understands.

“Ship owners have not been booking new ships much because of the very unclear future for the shipping industry, and ordering a new vessel is more expensive than buying a second-hand carrier, and the potential gains from chartering a new ship will not justify the price difference for now,” the Shanghai market source said, adding that the steady delivery of new ships to the owners have further weighed on the market pessimism.

The pandemic has added another 20-30% to ship builders’ personnel costs, according to him, and CANSI’s data showed the revenue among 75 major builders over January-August totalled Yuan 169 billion ($250 billion), down 2.3% on year, and their gross profit slumped 47% on year to Yuan 1.16 billion.

Japan, another top shipbuilding country, faced the similar difficulties, as its new vessel orders posted an on-year decline for the sixth consecutive month by July, down 15.4% on year to 469,750 gross tonnes or eight vessels, and the backlog hovered at the lowest level since the mid-1990’s, totaling 14.31 million gross tonnes, down 37.2% on year, as reported.

Written by Anna Wu, wub@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com