Global ship orders may plunge more than half this year
Global ship orders may plunge more than half this year after optimism about world trade and China's need for raw materials caused demand to surge in 2007, according to Lloyd's Register Group. "It simply can't carry on at the unprecedented rates of last year,'' John Stansfeld, president of Lloyd's Asia, said in an interview in Shanghai yesterday. "It has to slow down." Orders for vessels to carry fuel, iron ore and consumer goods have all cooled this year amid concerns about a global slowdown and the subprime mortgage crisis. Hyundai Heavy Industries Co., the world's biggest shipbuilder, and other yards won a record 246.3 million deadweight tons of orders last year, 43 percent more than in 2006, according to Clarkson Plc.
"Uncertainty in the global market is making shipping lines hesitant about ordering more vessels,'' said Lee Jae Won, a Tong Yang Investment Bank analyst in Seoul. "Still, shipyards have a backlog of almost four years and ship prices remain at record levels, so it's still a shipbuilders' market at the moment.''
The price of a ship able to carry 6,200 20-foot containers reached $107 million at the end of March from $106.5 million at the end of last year, according to London-based Clarkson, the world's largest shipbroker. The price of a 300,000-deadweight-ton oil tanker rose to $152 million last month from $146 million last year.
Chinese Challenge
South Korea, the world's largest shipbuilding nation, also faces rising competition from China, which is aiming to make more complex and profitable vessels. China surpassed Japan as the world's second-biggest shipbuilder in 2006 and may rank first by 2015, Stansfeld said.
"For China to get to the top of the industry, it needs to diversify its vessel types,'' he added. "It will take a great deal of effort to get to the same level'' of sophistication as Japan and South Korea, he added.
China, which predominately makes bulk carriers at present, should be preparing to add more container ships and oil tankers, Stansfeld said. Later, it can move into areas including building vessels for liquefied natural gas and liquefied petroleum gas.
Chinese shipbuilders delivered 19 million deadweight tons of vessels last year, a 30 percent increase from 2006. Those deliveries accounted for 23 percent of the world's total.
China Orders
New orders rose 32 percent to 98.5 million deadweight tons, expanding the total order-book to 158.9 million deadweight tons, according to Lloyd's, which has run ship registers for more than two centuries.
Lloyd's Register has opened a training center in China and formed a local design group because of demand, Stansfeld said.
China State Shipbuilding Corp., the world's second-largest shipbuilder, aims to become the biggest by 2015, Director Xu Miao said in a presentation at a Shanghai shipping conference yesterday.
The company delivered 6.55 million deadweight tons of vessels last year, accounting for 7.5 percent of the global total. New orders totaled 23 million deadweight tons in 2007. The company is holding contracts for 50 million deadweight tons, 10 percent of the world's total, according to Xu.
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