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China’s newbuilding orders shrink in first four months

China’s newbuilding orders shrink in first four months
Newbuilding orders at Chinese shipyards continued to fall in the January to April period over last year, following the decline in the first quarter as well, according to figures released by China Association of The National Shipbuilding Industry (Cansi).

From January to April 2015, China’s shipbuilders received new shipbuilding orders with tonnage amounting to 6.63m dwt, a plunge of 78.1% compared to the same period of last year.

The year-on-year percentage fall was not far off from the 76.8% decrease seen in the first quarter, where new orders received were at 5.99m dwt in tonnage terms, Cansi figures showed.

The shipbuilding association further highlighted that a smaller group of 54 leading Chinese yards received newbuilding orders of 5.51m dwt in the first four months, taking up 83.1% of the country’s total market share.

In completed tonnage, China’s shipyards produced 12.47m dwt of newbuilding capacity in the January to April period, representing an increase of 20.4% over the previous corresponding period.

As at 30 April 2015, Chinese shipbuilders sat on a combined orderbook of 139.96m dwt, a dip of 6.8% year-on-year and a drop of 6.3% compared to the end of 2014.

Cansi monitors 88 main yards and revealed that they generated a combined revenue of RMB87.6bn ($14.15bn) in the first four months, an increase of 10.8% year-on-year. Profit, however, declined by 15.9% to RMB1.85bn, pointing to the challenges of thin margins due to rising material and labour costs, as well as low newbuilding prices.

Cansi also pointed out that there are currently 1,441 yards that have a fair level of operations, and they generated a total revenue of RMB139.3bn in the first four months, an increase of 6.4% year-on-year. Among the total, shipbuilding revenue amounted to RMB90.2bn, shipping equipment raised RMB20.9bn and ship repair contributed RMB4.12bn.

Profit, however, fell 10.6% year-on-year to RMB5.05bn for the 1,441 yards, for similar reasons.

The number of yards at 1,441 that Cansi took record of in the first four months was down from the 1,486 figure that it mentioned in the first two months, indicating that the country’s shipbuilder sector is shrinking as a result of the ongoing consolidation.