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Leading 51 China yards take 96.5% of new orders in first five months

Leading 51 China yards take 96.5% of new orders in first five months
Fifty-one leading Chinese shipyards, mostly subsidiaries of the two state-owned shipbuilders China Shipbuilding Industry Corp (CSIC) and China State Shipbuilding Corp (CSSC), have taken up 96.5% of newbuilding market share in the January to May period.

China has recorded newbuilding orders coming up to 14.38m dwt in the first five months, an increase of 83.1% year-on-year, while the 51 leading shipyards accounted for 13.88m dwt, or 96.5%, of the total newbuilding tonnage, according to figures from China Association of the National Shipbuilding Industry (Cansi).

Amidst the severe downturn of the shipbuilding sector and the ongoing consolidation, there are less than 300 yards with active day-to-day operations at present. Even as newbuilding orders have jumped, the majority of Chinese yards continued to face a dearth of orders as deals have been concentrated in the hands of just 51 yards.

The latest five-month period’s rise in new orders followed the increase as well in the first four months compared to year-ago levels.

In completed tonnage, Chinese shipyards registered a total of 12.83m dwt of new vessel capacity in the first five months, down 17.1% compared to the same period of 2015, Cansi figures showed. The 51 leading yards took the lion’s share of production on 11.97m dwt, down 16.4% year-on-year.

The orderbook backlog as at 31 May 2016 stood at 122.84m dwt, a drop of 11.1% year-on-year, and inching down 0.2% from the end of 2015. Similarly, the 51 leading yards sat on the bulk of the orderbook backlog on 117.86m dwt, taking up 95.9% of the country’s total.

Cansi also monitored 94 main shipyards where their combined completed vessel tonnage during the January-May 2016 period was valued at approximately RMB166bn ($25.2bn), with shipbuilding accounting for RMB81.5bn, ship equopment taking up RMB12bn, and ship repair at RMB4.6bn.

The 94 main shipbuilders generated a total revenue of RMB115bn in the first five months, a decrease of 3.8% compared to the previous corresponding period. Their combined profit also fell by 22.3% year-on-year to RMB1.6bn due mainly to low newbuilding prices and rising costs of operations.

The dire state of China’s shipbuilding industry has seen the withering away of virtually all speculative and greenfield shipyards, as well as the collapse of formerly successfully privately-owned shipbuilding enterprises such as Sinopacific Shipbuilding Group and China Huarong Energy (previously named Rongsheng Heavy Industries).

The two state-owned groups, CSIC and CSSC, have taken measures to ride out the storm by implementing internal reorganisation and streamlining its various subsidiaries to cut costs and raise efficiency.

Recently, CSIC announced that it is transferring the assets of its subsidiary Qingdao Beihai Shipbuilding Heavy Industry to another of its subsidiary Wuchang Shipbuilding Industry Group as part of its business streamlining program.

CSIC also plans to transfer its 100% ownership in Shanhaiguan New Shipbuilding Industry to another of its subsidiary Dalian Shipbuilding Industry Co (DSIC).