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China yards continue to see lower new orders in first seven months

China yards continue to see lower new orders in first seven months
China’s shipbuilders continued to see reduced newbuilding orders in the first seven months of this year amid the sluggish shipbuilding market, according to figures released by China Association of the National Shipbuilding Industry (Cansi).

From January to July 2015, China’s shipyards took in 14m dwt in new order vessel capacity, representing a sharp 69.4% plummet compared to the same period last year, Cansi figures showed. New shipbuilding contracts placed by foreign owners were at 11.9m dwt, a plunge of 72.2% year-on-year.

In the first six months of this year, newbuilding orders also plunged by 72.6% year-on-year, and a reversal of this decline is unlikely as the global shipbuilding sector has yet to get itself out of the woods.

On the production side, the shipyards completed 22.69m dwt of new vessel tonnage, an increase of 9.8% compared to the previous corresponding period. Among the total, 20.22m dwt were for exports, a decline of 11.6% compared to year-ago figures.

As at 31 July 2015, Chinese shipyards sat on a combined orderbook backlog of 136.7m dwt, a decrease of 10.9% year-on-year, according to Cansi.

Cansi also monitors the output from China’s 54 leading shipyards, showing that they won 12.62m dwt in new orders in the first seven months, taking up 90.1% of the country’s market share.

As China’s shipbuilding industry continues with its consolidation phase, a trend has emerged that stronger yards will get bigger and shipowners are increasingly approaching only the bigger yards to place orders.

The 54 leading shipyards completed 20.99m dwt of vessel tonnage in the first seven months, and sat on an orderbook of 134.16m dwt at the end of July.

On a slightly wider scale, 88 main Chinese yards also monitored by Cansi generated a combined revenue of RMB164.5bn ($25.7bn) in the first seven months, an increase of 3.7% compared to the previous corresponding period.

The shipbuilders’ profit, however, recorded a dip of 17.7% year-on-year to RMB3.35bn due to lower newbuilding prices, rising operating costs, and buyers delaying and amending contracts.