amounted to RMB14.6 billion (US$2.3 billion), down 7% and 4.1% year-on-year respectively. At the same time, the ship conversion market has become stagnant while price competition has become fiercer. According to statistics, turnover and profit from shiprepair and ship breaking in the whole year of 2011 amounted to RMB66.3 billion (US$10.52 billion) and RMB3.3 billion (US$523.8 million) respectively, up 16.3% and 14.9% respectively from the previously year. A note must be made that these income figures included turnover and profit from ship breaking and certain shipbuilding businesses of those shipyards. In fact, ship repair business earned very little and some yards have already recorded losses from their shiprepair business.
Inadequate orders for ship accessory companies Aſter the outbreak of the global financial crisis, China’s ship accessory companies are facing even greater challenges than the shipbuilding firms in the country as Japanese and South Korean ship accessory providers have intensified competition. Some overseas marine diesel engine companies have achieved breakthrough on the limitation on sales region by production license agreement. Leveraging on their advantage of scale, these foreign companies have sold marine diesel engines to China at low prices, hampering the development of the country’s diesel engine manufacturing industry. Massive imports also happened in the middle-velocity diesel engine sector, deck machinery and marine generator sectors etc. It became difficult for key enterprises in those areas to win contracts and hence these companies did not have enough work to do. Te localisation of China’s ship accessory industry has, therefore, progressed slowly. As the prices of ship accessories fell, advance payments shrank
and production costs climbed, companies in the sector have seen their financial status deteriorated; inventory increased; cash flow tightened and it became more difficult for these companies to repay loans. In 2012, the global shipbuilding industry is expected to face an
even more challenging environment. According to some experts the forecast for 2012’s volume of global new ship orders is expected to be 70-80 million dwt, and shipbuilding completion volumes are expected to be about 150 million dwt. Te imbalance between demand and supply for ships is expected to become more serious. Prices of new vessels are expected to continue going downward; but the prices of 10,000TEU containerships and LNG carriers are expected to remain stable. China’s shipbuilding completion volume is expected to fall
slightly in 2012. No improvement is expected on the volume of newly-received orders and orders in hand are expected to shrink. Te major economic indices of China’s shipbuilding industry are expected to decline as the proportion of high-price vessels among all vessels to be delivered falls sharply, labour costs rise and the pressure of the appreciation of the Yuan mounts. On top of winning new contracts and making deliveries, making profits will become the next challenging issue faced by China’s shipbuilding sector in 2012. NA
*Designated size = Annual sales of core business reach RMB20 million (US$ 3.17 million).
The Naval Architect May 2012 April
2012_vertical.indd 1
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