China and South Korea Contend for Hegemony in Shipbuilding Market; China and Singapore's Mighty Border-crossing in Marine Vessel Market

Shipbuilding market forms a situation of China-South Korea contending for hegemony

Since 2018, the shipyards of China, Japan and the South Korea have taken new ship orders of 34.41 million tonnes, with a global market share of 98%. Among them, the enterprises of China and the South Korea have a remarkable competitive advantage. For the South Korea, 115 new ships, 15.73 million tonnes of dead weight, were carried out in the first half of this year, an increase of 20% over the same period of last year, which accounted for 45% of the world's total and ranked first in the world; In terms of ship structure, Korean enterprises almost monopolized the large LNG, VLCC and other large and medium crude oil tanker markets, and have achieved good results in fields like MR tankers, large container ships and VLGC markets. For China, shipyards received 203 orders, 14.23 million tonnes, in the first half of the year, an increase of 18% over the same period of last year, accounting for 40% of the world's total, second only to the South Korea; In terms of structure of orders, China's shipbuilding industry continued to lead the bulk carrier market. At the same time, domestic enterprises were accelerating product diversification and upgrading. In such field of medium and high-end ships as VLGC, refined oil tankers, ro-ro ships, ro-ro passenger ships and small cruises, China's shipbuilding industry constantly enhanced its market influence. For Japan, the international competitiveness of its enterprises was obviously inadequate under the market environment of low ship prices. Their customers were mainly local shipowners. In the first half of the year, only 58 orders, 4.44 million tons of dead weight, were received, a slight decrease of 3% compared with the same period last year, and an 12% decrease in the international market share.

China and Singapore’s mighty border-crossing weakens the share of the South Korea

China and Singapore which originally focused on jack-up drilling rigs have steadily increased their competition for orders for floating production platforms as the market demands. They united engineering design enterprises participating in bidding for projects worldwide and have won considerable orders with cost and price advantages. As for China, 4 orders from production platforms were received in the first half of 2018, together with 15 orders for marine vessels. The total amount of orders reached 2.4 billion US dollars, accounting for 45% of the world's total and ranking the first place in the world, an increase of 44% over the same period last year. Singapore, which accounted for 31% of the world's total with its orders of $1.7 billion in the first half of the year, ranked behind China and received far more orders than in the same period in 2017. The South Korea, for its advantage in the field of floating production platforms weakened by China and Singapore, only undertook one floating LNG production equipment and one FSRU orders in the first half of 2018, a total of about $700 million, which was a sharp drop of 84% year-on-year. Its market share was only 14% left, which was far behind China and Singapore.


Share of orders of major shipbuilding countries in the first half of 2018

Trend of market

Despite the impact of "trade hegemony" from the United States on related trade, trade between non-trade disputed countries and global transshipment trade will be stimulated to a certain extent, and coupled with the sustained and rapid development of developing economies such as Southeast Asian countries, the overall demand for global maritime trade will continue to grow steadily. In contrast, due to the limited delivery of new ships, the global fleet capacity growth may remain low, which is conducive to the continued digestion of excess capacity. Besides, the shipping market will be stable, and even hopefully better. On this basis, the delivery volume of new ships in the shipbuilding market is relatively stable, and there are certain opportunities in the major ship market. Overall, the investment capacity and willingness of shipowners have risen significantly at this stage, and new routes and opportunities will create new demand for ships. In addition, environmental regulations such as the BWM Convention and the global sulfur limit rule will further accelerate the pace of renewal of shipowners and their fleets. Therefore, the real demand for new ships will remain a good trend in the short term.

However, it is noteworthy that the current marine vessel market is still not completely out of the serious oversupply stage and it is difficult for the rent to have a substantial rebound in a short time. Restricted by oversupply and large-scale hand-held orders, new demand for drilling platforms and oil and gas-used marine vessels will remain small in the short term, and the order structure dominated by floating production platforms and non-oil and gas-used marine vessels will continue for some time. Despite significant new orders for floating production platforms, small and medium-sized enterprises can hardly benefit from it because of the higher barriers and only large enterprises are beneficiaries. At the same time, the entry of more enterprises will continuously intensify the competition and reduce the profit of orders. Therefore, for construction enterprises, the future is still a period of wound healing, and there are still difficulties to completely eliminate troubles in taking orders, delivery and profitability.

Source: China Shipbuilding Industry Research Center