Shipbuilding is a modern and comprehensive industry of strategic importance that provides technical equipment to industries such as water traffic, ocean development and national defense. China’s shipbuilding industry has been developing rapidly with the government’s policy support and cost advantages since the beginning of the 21st century. China-made mainstream ships including container ships, bulk carriers and oil tankers and high-end ships including liquefied gas carriers have certain competitive advantages on the international market. In the recent decade, the global shipbuilding industry presented a market structure of tripartite China-South Korea-Japan competition.

According to CRI, in 2020, affected by the COVID-19 epidemic, the global new shipbuilding market remains sluggish. In 2020, pessimistic expectations in the global newbuilding market will increase, new ship transactions will decrease significantly, and the number of new ship orders received by major shipbuilding countries will decline year-on-year.

From January to November 2020, China received orders for new ships of 22.52 million dwt, a year-on-year decrease of 8.7%. Among them, orders for export ships were 19.77 million dwt, a year-on-year decrease of 13.5%, and export orders accounted for 87.8%. In the same period, Japan’s orders for new ships dropped by 66.7% year-on-year, and South Korea’s orders for new ships dropped by 8.4% year-on-year. The global market share has increased. From January to November, China’s shipbuilding completions, new orders, and hand-held orders accounted for 40.4%, 50.8% and 46.9% of the global market, respectively. The three major indicators are higher than in 2019. The completion of shipbuilding industry was better than expected.

On November 15, 2020, the ten ASEAN countries, China, Japan, South Korea, Australia, and New Zealand formally signed the Regional Comprehensive Economic Partnership Agreement (RCEP). RCEP is currently the world’s largest free trade zone. In 2019, the 15 member states of RCEP have a total population of 2.27 billion, GDP of 26 trillion U.S. dollars, and total exports of 5.2 trillion U.S. dollars, each accounting for about 30% of the global total. The establishment of the RCEP free trade zone means that about one-third of the world’s economy will form an integrated market.

After the agreement comes into effect, more than 90% of the goods trade in the region will eventually achieve zero tariffs, and the tax will be reduced to zero immediately and within 10 years, so that the RCEP free trade zone is expected to fulfill all the goods trade liberalization commitments in a relatively short time . According to CRI analysis, After the RECP takes effect, it will greatly promote the import and export trade between the contracting states, thereby promoting the rapid development of intra-regional and external maritime trade. Shipping is still the most important mode of transportation in global trade. The signing of the RCEP agreement may bring new growth momentum to the shipping industry, and the development and growth of the shipping industry will create new market space for the shipbuilding industry.

According to CRI’s forecast, if the COVID-19 epidemic can be alleviated in 2021, the global and Chinese shipbuilding industry is expected to recover. If the epidemic continues, the global shipbuilding industry will still be in a downturn in 2021 and may not gradually recover until 2022.

Reference: Research Report on China’s Shipbuilding Industry, 2021-2025

Topics Covered in the report:
– The impact of COVID-19 on the global shipbuilding market
– Development environment of shipbuilding in China
-Sales volume and value of shipbuilding in China 2015-2025
-Sales volume and value of shipbuilding in China by section 2015-2025
– Major shipbuilding Manufacturers and their market share in China
– Export volumes and values of shipbuilding in China
– Major export destinations of China’s shipbuilding
– Prices of shipbuilding in China
– Prospects of Chinese shipbuilding Market 2021-2025

The post China’s shipbuilding industry completed 33.24 million deadweight tons in 2020, down by 2.6% YOY first appeared on CRI Report.

In 2009, the quantity of global shipbuilding orders declined by 90% as compared to its 2007 peak. It recovered to 117 million gross tons in 2013, fell sharply in 2014, reached 23 million gross tons in 2016, rose to 57 million gross tons in 2017 and decreased to 54 million gross tons in 2018. The global shipbuilding industry is highly concentrated.

Before the rise of Chinese shipbuilders, the global shipbuilding market was dominated by South Korean, Japanese and European shipbuilders. In particular, South Korean and Japanese shipbuilders took 80% orders before China surpassed Germany and Japan to become one of the world’s three largest shipbuilding countries, according to CRI’s Shipbuilding Industry Analysis.

The recovery of the shipbuilding industry cannot be achieved without certain external conditions. The reason why the quantity of global shipbuilding orders reached a peak in 2007 was that China’s economic prosperity boosted global trade, significantly increased marine traffic and directly expanded the demand for ships. However, China’s economic growth is slowing down.

Although India is expected to become the next China, it has yet to show the same growth curve. Moreover, the emerging economies of Vietnam, Indonesia and other Southeast Asian countries are much smaller than that of China. Therefore, it is unlikely for the quantity of global shipbuilding orders to reach the 2007 peak.

In recent years, environmental problems are becoming increasingly serious worldwide and environmental protection laws and regulations have become stricter, which is expected to have a positive impact on the shipbuilding industry.

The International Maritime Organization (IMO) has released new standards and regulations on environmental protection and maritime security, which lowers the upper limit of SO2 emissions in the shipping industry from 3.50% to 0.50%. To meet this requirement, shipping companies can use low-sulfur fuels or install scrubbers or other desulfurizers to their ships.

The use of low-sulfur fuel oil can avoid remodeling ships, but it is expensive and may impair engines. The installation of scrubbers requires investing a lot of funds and remodeling existing containers. Another way to cut emissions is to use liquefied natural gas (LNG)-fueled ships.

To cut emissions, shipping companies may apply low-sulfur fuel oil or scrubbers to old ships and choose LNG-fueled ships when they purchase new ships. Therefore, the orders for LNG carriers will keep increasing. The changes in global environmental standards may not bring great economic improvement, but they are a positive signal to the shipbuilding industry.

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The post Global Shipbuilding Industry Analysis in 2019 first appeared on CRI Report.

Boom cycle in shipbuilding industry usually include a 5-year boom and a 10-year recession. Recently, ship rents and prices both have been at favorable levels and good news were heard from ocean engineering equipment market. Therefore, it is estimated that orders in the last half year of 2017 and the first half year of 2018 will increase. According to ship price index trend in the past 36 years, there will be a sharp growth in a cycle of around 15 years, usually lasting for 5-6 years; therefore, investors of shipbuilding and shipping business need to make profits within 5 years and wait for new opportunities for the next 20 years.

From 2016 to 2017, share price of shipbuilding industry already showed a sharp increase. However, this might be merely a start: if the boom cycle begins, there will be profits in the next 5 years.

Three major ship enterprises of South Korea gained orders of USD 7 billion last year, in which Hyundai Heavy Industries Co., Ltd. (including its subsidiaries Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries) received orders of USD 5 billion and Daewoo Shipbuilding & Marine Engineering USD 1.55 billion. Samsung Heavy Industries only gained orders of USD 520 million. In this year, orders of three major ship enterprises have added up USD 10 billion. Orders of Samsung Heavy Industries reached USD 4.8 billion, accounting for 74% of its annual goal–USD 6.5 billion. If it keeps the momentum, the three ship enterprises of South Korea are expected to achieve the goal of USD 20 billion. Compared with USD 7 billion of last year, orders of shipbuilding industry in South Korea have soared, demonstrating the overall recovery of shipbuilding industry.

Reference

China Shipbuilding Industry Overview, 2016-2020

The shipbuilding completion amount was 41.84 million DWT with an increase of 7.1% YOY in China in 2015. New orders were 31.26 million DWT with a decrease of 47.9 % YOY.

The post A 15-year Boom Cycle in Shipbuilding Industry Coming first appeared on CRI Report.