It is reported that in January to September the gross output value and export delivery value of China ship industry both presented two digit growths but slower ones compared with last year.
The completion of new ships posted large YoY growth however new ship orders continued declining for 12 months. The impact of financial crisis on ship industry became more obvious and the operation situation didn’t show visible signs of improving.
Status quo and demand analysis of shipbuilding steel market
1 ship plate output fell largely, price lingered at low level
According to China Iron & Steel Association statistics, China produced 7.41 million tonnes of ship plates in January to July a decrease of 3.88 million tonnes from the same period of last year or down 40.7%YoY. In July the ship plate output posted at 1.25 million tonnes falling 34%YoY.
The statistics showed that the outputs stayed steady in a similar level in May, June and July. During those months, mills experienced fine orders mainly for exports and direct supply. They cut down domestic traders’ orders or raised order price to alleviate the oversupply in domestic market.
2 Mills raised ship plate price
In August affected by iron ore spot price upswing, domestic mills lifted their Aug and September ship plate ex-works prices. The statistics suggested that price for 20mm CCSB ship plate averaged CNY 4050 per tonne in July in 9 key cities of China up by CNY 150 per tonne MoM. August delivered price rose up by CNY 200 per tonne to CNY 500 per tonne and Baosteel and Wuhan Steel lifted their September delivered price up by over CNY 700 per tonne.
3 Ship plate price remained low
As to the future price, Insiders thought that ship plate market price would remain the low level in short time, though mills run their Aug and September ex works price up. Intensive liquidity and low ship demand, adding postpone in ship delivery, made most of shipbuilders wait and see. Feeling the declining demand, shipbuilders didn’t buy steels in large size.
4 Reason why ship plate demand declined
I) Korean demand shrunk, bringing down China’s ship plates exports
II) Shipbuilders dealt with de-stocking, reducing orders
III) Small ship yards in Zhejiang, Jiangsu and Shandong shut up
IV) The business of refitting ships dropped sharply
V) The production of ship segments fell down
IV) The downturn of shipping market caused the delay of ship delivery and cancellation of ship orders, influencing the start-ups in ship building.
5 Demand of shipbuilding steels kept stable growth
The revitalization plan in ship industry, released by State Council, required ship industry to keep stable and fast growth in future three years and hoped the shipbuilding capacity to reach 50 million DWT per annum by 2011.
As per the statistics, China owned 192.35 million DWT of ship orders in end July. The statistics of ship plate consumption in different ship types showed that ship plate consumption coefficient respectively posted 0.14 to 0.3 in bulk carriers, 0.15 to 0.21 in oil tankers, 0.36 in Chemical tankers, 0.28 to 0.3 in container carriers and 0.27 in LNG ships. In varieties, orders of bulk carriers occupied 64.5% of the total held by China that of container carriers 7.5% that of oil tankers 23.5%.
According to the orders, China would deliver 56.58 million DWT of ships this year. The conservative expectation suggested that the real delivery this year would excess 40 million DWT up by 13%YoY considering the possible order cancellation and delay in financial crisis. So, it’s calculated that China would consume 13.3 million tonnes of shipbuilding steels including 11.7 million tonnes of ship plates, 1.2 million tonnes of section steel and bulb steel and 0.4 million tonnes of steel pipes.
(Sourced from eworldship.com)
