Chinese Shipbuilding Predicts Upturn After Slowing YTD in 2022
New statistics from Chinese officials continue to show the impact of the pandemic and China’s zero-COVID policy is having on the shipbuilding industry. While reporting that China’s global market share had slipped to second behind South Korea for the first time since 2018, Chinese state media quoted analysts saying China will regain the top position in the second half of the year.
“Chinese shipbuilders are working around the clock to meet rising global orders,” reports the Global Times which operates in association with the Chinese Community Party. They quoted analysts saying the yards are now back to 70 percent of normal capacity and continue to catch up. The three major shipbuilders based in the region around Shanghai, Jiangnan Shipyard, Hudong-Zhonghua Shipbuilding, and Shanghai Waigaoqiao Shipbuilding, they said have all resumed production.
The reassurances that the shipbuilders are on track to reclaim the world’s top position came as the China Association of the National Shipbuilding Industry (CANSI) released data from May 2022 showing that the declines that had begun in April sharply accelerated for orders during May.
CANSI reported a 15 percent decline in output at the shipyards for the first five months of 2022, down to 14.3 million dwt. Output in April was the lowest at just under 2 million tons but for May they are reporting it jumped to over 3 million tons. In the first quarter, China’s total shipbuilding output was nearly 10 million tons averaging over 3 million tons per month.
Chinese officials are citing the global disruptions as well as logistic hurdles and quarantine measures as contributing to the factors for the declines as well as permitting South Korea to temporarily replace China as the largest shipbuilding country. They also highlighted the high-value LNG carrier orders booked by South Korea. The South Koreas, however, are closely watching increased LNG carrier orders in China.
The orderbook for Chinese shipbuilders is down nearly 50 percent year-to-date over 2021. Comparing the current report to last month’s data, China reported just 2.3 million dwt for orders in May. Orders in 2022 totaled 17.7 million dwt at the end of May versus a reported 15.4 million dwt in April. The slowing in orders appears to have resulted during the second quarter as China reported 78.5 million dwt in orders for the first quarter, which was largely flat with 2021 (down 1.4 percent).
In May 2022, China reports it had a 34 percent market share for new orders compared to South Korea’s 48 percent. They, however, highlighted that their total backlog stands at just over 102 million dwt, which remains up 20 percent versus 2021.
Quoting analysts, the Global Times writes, “What Chinese shipbuilders accomplished in recent months was significant, as they had to deal with supply chain snags and rising raw material prices as well as fighting against the epidemic.”
They are predicting an upturn in orders for the shipbuilding sector in part due to persistent port congestion in the United States and the geopolitical situation in Europe. They are confident that with the resumption of business at the shipyards that China will regain its momentum in shipbuilding.