Analysis of Shipbuilding Industry Economic Operation from January to July

From January to July 2010, China’s shipbuilding industry continued to develop rapidly. The volume of completed shipbuilding and orders for new orders have increased significantly. The main economic indicators have maintained double-digit growth, and the overall economic performance has been good.

I. Basic conditions of economic operations (1) The volume of completed shipbuilding and the volume of new incoming orders have grown rapidly.

From January to July, the country's shipbuilding capacity reached 35.2 million dwt, an increase of 87.4% year-on-year; and the number of new ship orders received was 33.32 million dwt, 4.2 times the same period of last year; new orders received in April, May, and July Exceeding the amount of work completed in the current month, the number of orders for hand-held vessels in China began to rebound from the end of April, reaching 188.16 million dwt by the end of July, which was basically the same as at the end of 2009.

(II) The gross industrial output value maintained double-digit growth.

From January to July, the total industrial output value of shipbuilding enterprises above designated size reached 371.3 billion yuan, a year-on-year increase of 22.7%, a year-on-year decrease of 10.9 percentage points. Among them, the shipbuilding industry was 284.5 billion yuan, an increase of 22.1% year-on-year, an increase of 17.3 percentage points year-on-year; the ship supporting industry was 41.8 billion yuan, a year-on-year increase of 28.4%, an increase of 10.9 percentage points year-on-year; the ship repair and shipbreaking industry was 42 billion yuan. The year-on-year increase was 19.3%, an increase of 14.7 percentage points year-on-year.

(iii) Exports of the shipbuilding industry maintained growth.

From January to July, the country’s completed export ships totaled 27.81 million dwt, which accounted for 79% of the total number of shipbuilding completions. Newly-accepted export ship orders were 23.99 million dwt, accounting for 72% of the total number of new orders received. By the end of July, export ships were held by hand. Orders of 16558 million dwt, accounting for 88% of the total number of orders held.

From January to July, the export delivery value of shipbuilding enterprises above designated size was 162.8 billion yuan, a year-on-year increase of 15.7%, a year-on-year decrease of 5.6 percentage points. Among them, the shipping manufacturing industry was 136.6 billion yuan, an increase of 16% year-on-year, a year-on-year decrease of 14.9 percentage points; the shipbuilding industry was 5.71 billion yuan, an increase of 26.2% year-on-year, an increase of 25.4 percentage points year-on-year; the ship repair and shipbreaking industry was 18.4 billion yuan. The year-on-year increase was 9.1%, an increase of 21.1% over the same period of last year.

Second, the main features of economic operations (A) ship enterprises to seize the market to pick up opportunities and actively undertake orders.

From January to July, China's shipping companies seized the opportunity of market recovery and actively took orders. The turnover of new ships rebounded sharply. Statistics show that from January to July, China's average monthly turnover of new ship orders was nearly 5 million dwt, which exceeded the average monthly transaction volume in 2008 when the international financial crisis broke out. In particular, the volume of new ships in July was 9.54 million dwt, which was the highest single-month transaction volume since the financial crisis broke out. Affected by the rebound of container ship and oil tanker market, some positive changes occurred in the order structure in July. China's shipbuilding enterprises have achieved a good harvest in the construction of large-scale oil tankers, container ships and engineering vessels. Among them, orders for oil tankers accounted for new orders received in July. More than 35% of the quantity will help improve the hand-held order structure of China's heavy cargo carriers.

The new ship orders continue to invest in the construction of advanced technology, quality and reliable high-quality enterprises. From January to July, the number of orders for new ships obtained by 45 key monitoring shipbuilding enterprises in China accounted for 89.4% of the total new orders received nationwide.

(II) Key monitoring companies’ total profits continue to grow.

From January to July, 83 key monitoring shipbuilding enterprises (including ship supporting enterprises) achieved a total industrial output value of 198.35 billion yuan, a year-on-year increase of 13.53%; completed industrial added value of 52.72 billion yuan, a year-on-year increase of 13.53%; and realized main business income of 1611.2 Billion yuan, a year-on-year increase of 14.2%; total profit of 16.64 billion yuan, an increase of 24.55%.

III. Main problems existing in economic operation (1) It is difficult for shipbuilding companies to accept orders, and the competition is fierce.

Since the outbreak of the international financial crisis, due to the drastic decline of the ship market, the demand for ship equipment has been declining. In addition, foreign OEMs have exported a large number of low-speed diesel engines to China at a low price. China's diesel engine manufacturing industry has been hit by huge impacts, making it difficult for companies to take orders. According to the understanding of the China Ship Association, the number of new orders received by most diesel engine companies from January to July decreased by more than 80% year-on-year. At present, only a few diesel engine manufacturers have production tasks scheduled for 2012. Most of the low-speed diesel engine manufacturers do not have production tasks in recent years. Full, especially the new low-speed diesel engine manufacturing enterprises start underemployment, the capacity is seriously idle. Compared with the increase of 87.4% in China's shipbuilding completion from January to July, the completion rate of China's low-speed diesel engines only increased by 8%, a difference of nearly 80 percentage points.

The low-price competition of foreign marine equipment enterprises caused a sharp drop in the prices of low-speed diesel engines. Since the beginning of this year, the prices of orders for most low-speed diesel engine manufacturers have continued to decline, and are basically on the verge of low profits and losses. In addition, major marine equipment such as medium-speed diesel engines, marine crankshafts, deck machinery, and marine generators are also facing low-cost impact from foreign equipment, and the loading rate of localized auxiliary equipment has declined.

(b) The maintenance of the ship has a very low price level, affecting the development of the industry.

Since the beginning of this year, some ship-repairing companies have adopted low-cost orders for competing for orders, resulting in a very low level of ship repairs in China. It is understood that at present, China's ship repairing companies in the three major project areas for plate replacement, rust, special coating prices are close to the cost price, which greatly affected the survival and development of ship repairing companies. The main reasons are as follows: First, the shipbuilding market has been sluggish since the international financial crisis erupted. Many shipbuilding companies have turned to the ship repair market, and the new ship repair facilities built a few years ago have been gradually put into production. This has caused severe overcapacity in the ship repair industry; and secondly, shipping. The market downturn caused the shipowners to have tight liquidity, reduced regular ship repairs, and significantly reduced the amount of repairs to large projects. Third, the market for shipbreaking was booming, and the market for modified boats shrank, causing the ship repair market to “have fewer problems”. From January to July, China's key monitoring companies carried out 2,455 ships docked, which was a year-on-year increase of 14.8%; sales revenue had dropped sharply year-on-year, with the largest drop of 37%.

Market Forecast In July, the global market changed the pattern of “bulk cargo ships alone” in the past. Volume of bulk cargo orders fell from over 7 million dwt in June to 4 million dwt; the order volume of oil tankers in the month was For the first time this year, more than 40% of the total volume of bulk carriers was exceeded. After experiencing an ice-free period of more than 20 months, the container ship market ushered in a long-lost rebound. In July, 32 container ships were placed on order. The average number of boxes is around 6200 TEU. The price of the new ship steadily increased. At the end of July, the price index for the new ship Clarkson closed at 142 points. The index has risen for five consecutive months since March. Experts expect that the volume of orders for container ships and oil tankers will increase further in the second half of the year, while the volume of orders for bulk carriers will drop at a high level due to the sharp drop in freight rates.

Taking into account the rigid demand for fleet replacement, experts believe that the demand for small and medium-sized bulk carriers will continue to flourish in the future, but due to its low entry threshold, market competition will be fierce. In addition, there is no clear sign of recovery in the global ship financing market. In the first half of this year, global financial institutions only issued 9.8 billion U.S. dollar shipbuilding financing loans, which was far below the 18.8 billion U.S. dollars in the same period of 2009. The implementation of some orders will be constrained.

In the marine steel market, the price of marine steel products has rebounded from the end of July after being affected by the national policy of eliminating outdated production capacity. However, due to overcapacity, the price of steel for ships in the third quarter will fluctuate slightly at current prices.

In the second half of the year, China's shipbuilding industry will continue to maintain its double-digit growth in its main economic indicators. It is expected that the shipbuilding capacity for the whole year is expected to reach 55 million dwt, and orders for new ships will be about 45 million dwt. About 175 million deadweight tons.

V. It is recommended that the shipbuilding industry should strengthen industry self-discipline, jointly study and coordinate the solutions to the current problems related to the ship supporting industry and ship repairing industry.