China's Shipbuilding Industry Struggles to Rebuild Post-Covid Volumes

China’s shipbuilding industry is slowly recovering from the impact of the pandemic showing a slow recovery in volumes. This comes as the rival South Korean shipbuilders are highlighting their success in attracting orders.

Overall, the Chinese shipbuilding industry recorded orders totaling approximately 15 million DWT during the first eight months of 2020. While this represents a more than four percent decline versus the prior year, it shows a slight improvement over the decline for the first seven months of the year. During August, the Chinese shipbuilders were able to claw back some of the losses from the first half of the year.

The data released by the Chinese Association of Shipbuilding Industry (CANSI), the government agency that coordinates all shipbuilding related businesses, illustrates that China’s shipbuilders have been able to get back to work after the suspensions during the pandemic. So far, in 2020, CANSI reports that collectively China’s shipbuilders have completed construction on more than 24 million DWT of ships. 

The production figure for the first eight months of the year is down more than seven percent versus 2019. It also illustrates a more significant concern for the Chinese which is the decline in the backlog. The shipyards are completing orders quicker than they are receiving new orders resulting in an overall decline in the outlook for the business. 

China’s shipbuilding total orderbook stands at just over 72 million DWT, which places it down more than 10 percent versus the level a year ago. While analysts have suggested that the Chinese domestic market might support the shipbuilding industry, CANSI figures highlight that approximately 90 percent of the tonnage is built for export. 

South Korean shipbuilders have also experienced the slowdown related to the pandemic, but they have recently been successful in attracting several large new orders. As a result, the South Korean industry booked a higher level of orders than the Chinese shipbuilders for the second month in a row in August. Korea’s success in orders came largely from demand in the LNG carrier sector.

While the Korean shipbuilders won more orders in the past two months, their total orderbook remains second to that of the Chinese industry as measured in total tonnage. Japan’s shipbuilding industry is a distant third behind the Chinese and Koreans.

The competition for new orders is likely to remain fierce with overall orders still down and not expected to recover this year according to industry analysts.