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Concentration On Gas Carriers and Cruise Ships to Stimulate China Shipbuilding Industry: Ken Research

Posted on 08 August 2016 by KenResearch Manufacturing And Construction ,

How the China Shipbuilding Market is Positioned ?

China became the global leader in the global shipbuilding industry in 2009 with a share of ~% surpassing South Korea. This was made possible by the lower cost of factors of production in China as compared to Korea and Japan. It is only in the recent years that China’s shipbuilding is suffering and that is restricted not only to China.

The revenue of the Chinese shipbuilding industry has been declining during 2010-2015 due to the plunge in the global orders. Fall in the global demand for bulk carriers to the tune of ~% is also the major reason which has resulted in decline in revenue as two-third of China’s yards are specialized in building bulk carriers. The devaluation of the Chinese Yuan against the USD is also the reason for the decline as customers observe the devaluation and so are not placing new orders.

The main characteristic of the Chinese Shipbuilding Industry has been the extensive government support to the industry. The point of concern is that Chinese labor involved in shipbuilding has 1/6th of the productivity of that of South Korea and 1/10th of that of Japan which for a little extent restrains the market

With more than ~ shipbuilding enterprises at the start of 2010, the number has drastically fallen to ~ with only ~ active shipyards. The state owned shipyards have responded to the worsening situation by consolidating its various yard subsidiaries so as to streamline operations and maximize the facility utilization. With such measures being taken by the shipyards, the survival of the handful of the shipyards is not by chance.

The China Shipbuilding Industry is segmented by the new shipbuilding industry and the ship-repair industry. The percentage contribution of the new ship services towards the shipbuilding industry revenue of China has come down in 2015 as compared to the previous years. This decrease can be attributed to the huge decline in the number of orders in 2015 which were recorded at a level of just ~. However, the repair and maintenance industry’s revenue share in the revenue of the entire shipbuilding industry has been increasing since 2013. Excessive lower prices were considered to be the major reason behind the increase in the contribution of the repair revenues to that of industry’s revenue which was attracting a lot of repair demand. Repair of high tech, more complex and sophisticated vessels have been responsible for the increasing share of ship-repair in China shipbuilding industry.

China’s shipbuilding industry is absolutely dominated by the state owned enterprises and state owned enterprises have been the drivers for growth in offshore industry of China as evident with the ~% share in the overall industry revenues. High government investments in the shipbuilding industry have led to high revenue share of state-owned players. Joint ventures have been increasing in China. The government has made it mandatory for the foreign players to establish their technology centers with the local players in order to support the technology imitation and hence the government feels that the joint ventures are necessary. Most of the foreign capital is coming from Europe, South Korea, the USA and Japan, that is, from the nations which are well renowned for their high end shipbuilding. The private players in China’s Shipbuilding industry hold a minimal share of ~% in the industry. Orders for new vessels, if made through the state owned shipyards, are subsidized by the government and the owner doesn’t have to bear the complete cost of the vessel. This has taken away the clients from the private shipyards towards the state owned and reduced their shares.

What are the regions where shipbuilding industries are concentrated in the China?

In terms of region, Dalian is considered as the major seaport in the south of Liaoning China. It’s the financial, shipping and logistics sector for North-East Asia. Dalian port has shipping and trading links with 160 countries and regions of the world and is ranked the eighth busiest port in the world, according to American Association of Port Authorities. Dalian has been given the title of “open city” by the Chinese government which allows it to receive sufficient foreign investment. Owing to all these reasons, shipbuilding is considered to be one of the pillar industries of Liaoning and presence of more number of manufacturing companies in region has resulted in highest number of ships produced counted to in 2015.

By type of ship, bulk carrier dominated the shipbuilding industry in China accounting for % of the total ships produced in China in 2015. Production of Bulk Carriers has come down in China Shipbuilding Industry. Technological competition for eco ships has been expanding with Europeans building solar ships and US developing wind powered ships and hence the orders for such ships had been shifted to the Europeans and the Americans. There has been a continuous decline in the container ship manufacturing owing to the decline in imports to Russia.  Declined imports from Russia resulted in Russian embargo and decreasing volumes of container shipping through the gateways to Russia, via Finland and Baltic countries, which resulted in decreased demand for container ships. The production of tanker ships in China has been on a decline since 2010 and the industry has experienced decline till 2015. In 2010, the tanker production was recorded at, which declined at a rapid pace and reached at just  in 2015. The Dry cargo ship manufacturing has been on a decline since 2011 and has shown no signs of recovery since then. The number stood at a level of in 2011 and by 2015, the number declined to a minimal value of dry cargo ships.

What are the Key Takeaways from Chinese Ship-Repair Industry?

Shipbuilding carries no relevance if repair and maintenance facilities are not available in a country. Labor and raw materials are the major determinants of the ship-repair industry. China along with India, South Korea and Brazil comes under the low cost group of countries for ship-repair. This is because of the lower administrative costs and wages. In comparing, the highest price registered in China was ~% cheaper than the lowest price registered in South Korea in 2015 which is China’s main competitor in shipbuilding. In terms of the cost split for the in the Chinese ship repair industry, steel accounts for ~% and labor accounts for ~% of the total cost of repair. The increase in the revenue from ship repair services in China was made possible due to the improvement in technology, evident from the fact that the number of ships repaired came down in 2014, but the revenue still increased.

Number of ships repaired in China was at its peak in 2010, at a level of ~, but the market has experienced declining number since 2010. The Euro debt crisis was the major reason for the decline, which resulted in the lesser number of ships being repaired in China and European nations being major clients for Chinese ship repairing companies, the demand for ship repairing from European countries declines. The recent merger between the Italian giant of ship repair and the Chinese ship repair giant will be a big push for the ship repair industry in China and might result in the rebound in the number of ships repaired as Fincantieri (the Italian giant) will help Huarun Dadong Dockyard in the development of technical skills, project management and logistics procedures by sharing its technical expertise mainly in the cruise sector.

Which Developments have Driven China Shipbuilding Industry?

Mergers and acquisitions have been the growing trend in most of the shipbuilding industries in the world. The goal is to enhance the competitiveness of the sector. The country has experienced large number of mergers in between 2010 and 2015. The merger of CSIC and CSSC which will be a big step, as one is a major military ship manufacturers and the other  is a major commercial one, one in north and the other in south, is on the cards and is about to happen in a few days from now. China is preparing to award more and more contracts for large containerships of upto ~ TEU and bulk carriers of ~ DWT VLOCs. It’s in sync with the construction facilities as most of the ports can’t accommodate more than ~ TEU boxships. All this has helped the shipbuilding companies in managing the overcapacities at the shipyards and increasing the market control.

Application of information technology is the new trend in the shipbuilding industry. Manufacturers are increasingly focusing on robotics, laser, and shipbuilding precision control technologies to upgrade or modernize the production processes. China’s main focus currently in modernization of the processes can be seen from the fact that the government is focusing on skill development through promoting marine engineering. Shipbuilding industry is continuously evolving as technologically advanced and capital intensive business rather than being driven mainly by labor intensity. In addition, China has formulated off shore engineering industry as one of the seven strategic emerging industries and has planned to invest ~ to ~ billion RMB (USD ~ billion - ~ billion) into it as declared in the 12th five year plan in 2011.

Global commodity prices are crashing as the boom fuelled by the money printing rampage of the central banks has started to cool down. This has also resulted in the reduction in the freight rates.

How is the Competition Structured in China Shipbuilding Industry?

China shipbuilding industry, where the dominant force is the state-owned enterprises, is controlled by five major state owned companies:

  • CSIC handles the shipbuilding activities in the north and the west of China.
  • CSSC has one of the largest shipyards in China in terms of shipbuilding output and annual capacity that is Shanghai Waigaoqiao Shipbuilding.
  • CIMC Raffles majorly focuses on engineering and construction of deepwater offshore projects and the company has the best track record in the semi submersibles segment, major aspect responsible for third leading position of company.
  • COSCO is involved in the construction of offshore equipments mainly in Nantong, Qidong and Dalian.
  • CMIH was recorded as the fastest growing offshore equipment builder in 2015 in China

What are the Future the Future Prospectes for China shipbuilding industry?

Projections for the future suggest that China’s Shipbuilding industry is anticipated to witness a CAGR of ~% in terms of revenues during the period 2016-2020. The future outlook for the Chinese shipbuilding industry is also contingent upon the investments in the infrastructure segment by the countries which are considered as untapped markets by the Chinese maritime analysts for instance, countries in central Africa and Latin America. If these countries do not have the necessary infrastructure required at the ports, the Chinese shipping industry will not have new orders from the owners of ships in such untapped markets.

It can be seen that most of the developing world and even the global economy is slowing down; so the commodity prices will remain weak and the shipping rates will stay depressed, in particular for dry bulk shipping.

Container shipping could be a benefiting sector as the volume to the western world has started to increase recently.

To know more on coverage, click on the link below:

https://www.kenresearch.com/manufacturing-and-construction/infrastructure/china-shipbuilding-market-statistics/42910-97.html

Contact:

Ken Research

Ankur Gupta, Head Marketing & Communications

query@kenresearch.com

+91-124-4230204

...

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Subdued Commodity Prices and Declining Freight Rates to Put a Constraint on China Shipbuilding Industry: Ken Research

Posted on 07 August 2016 by KenResearch Manufacturing And Construction ,

Prices for all the major commodities, for instance, coal; iron ore and crude oil are expected to remain depressed for the next few years. This undoubtedly translates into depressed shipping rates, especially for dry bulk carriers at the time when two-third of the Chinese shipbuilding industry is involved in the production of bulk carriers.

China News

With most of the developing world suffering from an economic slowdown, a prolonged weakness in the commodity prices is expected over the next decade. Fluctuations in the commodity prices have a huge effect on the Shipbuilding Industry. The expectation of low commodity prices means that there will be a readjusting of the current and future fleet of the shipping companies. This directly affects the orders for the new ships that the shipping companies place with the shipbuilders. In 2015, China’s Shipbuilding Industry accounted for 35% of the global shipbuilding industry’s revenue. China’s Shipbuilding Industry value has been declining since 2010. The new orders in China Shipbuilding Industry witnessed a negative CAGR of 7% from 2010-2015. This has been in line with the declining orders in the global shipbuilding industry. This is mainly attributable to the fact there is no longer any kind of elevation is expected in the prices of the commodities. After years of heavy investment in the commodity extraction, the majority of commodity producers are concentrating their attention on keeping their market share, especially in case of coal, iron ore and crude oil. This has created oversupply situation and has been the reason for the declining commodity prices.

It’s a rampant trend that when freight rates are not sufficient to cover the running costs, the vessels are laid up. China has been the most popular country for the laid-up vessels. The increasing trend is driven by the lower than estimated world economy’s growth and by persistent tonnage oversupply as evident from the dry bulk sector. Lay ups have been more for the larger vessels as the daily running expenses are considerably above the earnings with no signs of improvement in the world economy. This is one of the major causes for the decline of the industry.

Even the future does not seem to go well for the Chinese Shipbuilding Industry. A series of consolidation is on the cards for most of the Chinese shipyards. Revenues for the Chinese Shipbuilding Industry are expected to decline in the future. Even the steel industry, one of the major industries for the shipbuilding sectors, shows little signs of recovery and is exacerbating the problems for the shipbuilding sector.

The report titled “China Shipbuilding Industry Outlook to 2020 - Concentration on Gas Carriers and Cruise Ships to Stimulate China Shipbuilding Industry” provides detailed overview on the new shipbuilding and ship-repair industry of China. This report helps reader to identify the ongoing trends in the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report is useful for shipbuilding companies, shipping companies and the companies providing maritime services to the clients and other stakeholders to align their market centric strategies according to ongoing and expected trends in the future.

 

For more information on the report, refer to the below link:

https://www.kenresearch.com/manufacturing-and-construction/infrastructure/china-shipbuilding-market-statistics/42910-97.html

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

...

Read more…

Increasing Production of Gas Carriers and Cruise Ships with Incline in the Number of Naval Vessels will Provide Impetus to Chinese Shipbuilding Industry: Ken Research

Posted on 04 August 2016 by KenResearch Manufacturing And Construction ,

China News

  • Chinese Shipbuilding Industry is expected to be led by the naval shipbuilding, production of LPG/LNG carriers and cruise ships. Also the country is planning to increase its international trade through its ONE BELT, ONE ROAD initiative which is expected to lead the country’s waning shipbuilding industry.
  • The leading players in China Shipbuilding Industry are China Shipbuilding Industry Corporation, China State Shipbuilding Corporation, CIMC Raffles Offshore Co. Ltd., COSCO Corporation and China Merchants Industry Holdings Co. Ltd. Chinese Shipbuilding companies should invest more in facilities producing high-technology vessels, offshore oil and gas platforms, polar navigating and environment friendly ships.

The China Shipbuilding Industry had witnessed a declining phase over the period FY’2010-FY’2015. The market exhibited a negative CAGR during the period FY’2010-FY’2015 in terms of revenue. The large and high-end vessels, changes in the structure of the type of ships, modernization of the industry and the mergers and acquisitions are the major factors which had helped the market players to sustain in the declining China Shipbuilding Industry. Also, the increase in challenges faced by the companies in generating cash flows, in making timely deliveries, in attracting the young and innovative maritime professionals and the ageing workforce have posed a  challenge to the China Shipbuilding Industry.

The China shipbuilding industry had also witnessed over the past few years that the customers are shifting their preference from not only new ship manufacturing but towards ship-repairing too. This had increase the share of ship repair segment in China Shipbuilding Industry. The increase was made possible due to the improvement in technology for ship repair in China, evident from the fact that the number of ships repaired came down in 2014, but the revenue still increased.

The largest revenue generating sector of the market is Bulk carriers sector in overall revenues of China Shipbuilding Industry. In China, the massive growth in the number of naval vessels and the increasing trade relations with the untapped markets had majorly generated revenue for the shipbuilding industry. China has been moving towards increasing anti-surface warfare equipments and plans to increase its destroyers, frigates and submarines as per the US navy. Frigates such as the TYPE-054A are evident of the plan.

 According to the research report, the China Shipbuilding Industry will record revenue of USD 9.2 Billion by 2020 due to consolidation within the industry, huge number of shutdowns, large number of order cancellations due to the delayed deliveries and unpaid debts, overcapacity in the industrial units, no expectations of any rebound in the commodity prices and the weakening of RMB against USD. Chinese military expansion is expected to compensate for the downturn in the commercial shipbuilding industry. Cruise Ship manufacturing is also the segment which can bring good times for the industry. China has the potential to become the world’s largest cruise market. Increasing upper middle class group of China is flocking to luxury vacation cruises. Tapping such a market at a stage when most of the other segments are losing their sheen will finally turn out to be a great advantage for the China shipbuilding industry

It has been recommended that “Subsidies by the Chinese government should not be removed in one go rather the subsidies should be conditional. For instance, subsidies or the cost saved should be spent on the technology upgradation in the company or on the growth of human capital. China should keep in mind the experience of European shipbuilders in the 1980s when massive “unconditional” government subsidies failed to revive a dying shipbuilding industry. Also the government has to be fair in its approach to reward the achievements of private players which are distinct and outperforming.”, according to the Research Analyst, Ken Research.

The latest publicationon China Shipbuilding Industry Outlook to 2020 - Concentration on Gas Carriers and Cruise Ships to Stimulate China Shipbuilding Industryprovides a comprehensive analysis of China Shipbuilding Industry. The report focuses on the new shipbuilding and ship-repair industry in China. The report covers market size and segmentation of overall China Shipbuilding industry by type of ships delivered, by regional manufacturing clusters, by ownership, by customer base, by new orders and repairs. The report covers the market share and detailed company profile of leading players and the failed players. The potential and future outlook for China Shipbuilding Industry has also been discussed in the publication. The report provides detailed analysis of major players, their strategies, SWOT Analysis, Trends & Developments and major issues and challenges with the China Shipbuilding Industry. The report also serves as a benchmark for existing players and every new player who wish to capitalize the market potential and investors who are looking forward to venture into the China Shipbuilding Industry.

Key Topics Covered in the Report:

  • China Shipbuilding Industry Introduction and Size
  • Value Chain Analysis of China shipbuilding Industry
  • China Shipbuilding Industry Segmentation
    • By Type of Ships ( Gas carriers, Bulk carriers, Dry cargo, Tanker, Container, Passenger and others)
    • By New Ship and Repair Services.
    • By Regional Manufacturing Clusters
    • By Ownership
  • Military Shipbuilding Industry in China Shipbuilding Industry
  • Growth Drivers and Trends in China Shipbuilding Industry
  • Customer Base for China Shipbuilding Industry
  • Ship-Repair Industry Market Size by Revenues and Number of Ships Repaired in China
  • Ship-Repair Market Segmentation by Type of Repair Work in China
  • Market Share of Major Players in China Shipbuilding Industry
  • Company Profile of Leading and Failed Players in China Shipbuilding Industry
  • SWOT Analysis of China Shipbuilding Industry
  • China Shipbuilding Industry Future Outlook and Projections
  • Cost Analysis for Manufacturing of Ships in China Shipbuilding Industry
  • Analyst Recommendation
  • Macro Economic Variables Impacting the China Shipbuilding Industry

 Key Product Mentioned in the Report

  • Gas Carriers
  • Bulk Carriers
  • Dry Cargo Ships
  • Tanker Ships
  • Container Ships
  • Passenger Ships

Companies Covered in the Report

  • China Shipbuilding Industry Corporation
  • China State Shipbuilding Corporation
  • CIMC Raffles Offshore Co. Ltd.
  • COSCO Corporation
  • China Merchants Industry Holdings

For more information on the report, refer to the below link:

https://www.kenresearch.com/manufacturing-and-construction/infrastructure/china-shipbuilding-market-statistics/42910-97.html

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Global Offshore Rig Construction Market Outlook to 2018 - Rising Energy Demand & Deepwater Drilling Activities to Intensify the Market

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

...

Read more…

China Shipbuilding Industry Outlook To 2020: Ken Research

Posted on 04 August 2016 by KenResearch Manufacturing And Construction ,

The report titled “China Shipbuilding Industry Outlook to 2020 – Concentration on Gas Carriers and Cruise Ships to Stimulate China Shipbuilding Industry” provides a comprehensive analysis of China Shipbuilding Industry. The report focuses on the new shipbuilding and ship-repair industry in China and covers market size and segmentation of overall China Shipbuilding industry by type of ships delivered, by regional manufacturing clusters, by ownership, by customer base, by new orders and repairs. The report covers the market share and detailed company profile of leading players and the failed players. The potential and future outlook for China Shipbuilding Industry has also been discussed in the publication. The report provides detailed analysis of major players, their strategies, SWOT Analysis, Trends & Developments and major issues and challenges with the China Shipbuilding Industry. The report also serves as a benchmark for existing players and every new player who wish to capitalize the market potential and investors who are looking forward to venture into the China Shipbuilding Industry.

China Shipbuilding Industry 

Most of the developing world is suffering from an economic slowdown a prolonged weakness in the commodity prices is expected over the next decade. Fluctuations in the commodity prices have a detrimental impact on the Shipbuilding Industry in China. The expectation of low commodity prices means that there will be a readjusting of the current and future fleet of the shipping companies. This directly affects the orders for the new ships that the shipping companies place with the shipbuilders. In 2015, China’s Shipbuilding Industry accounted for ~% of the global shipbuilding industry’s revenue. China’s Shipbuilding Industry was valued at USD ~ billion in 2015 and the value has been declining since 2010 exhibiting a CAGR of ~% from 2010-2015. A mere ~ new order was placed at the Chinese shipyards in 2015. The new orders in China shipbuilding industry witnessed a CAGR of ~% from 2010-2015. This has been in line with the declining orders in the global shipbuilding industry. The major bright spot for the shipbuilding industry is the demand for energy shipping, especially LPG/LNG shipping as more nations are moving away from considering crude oil as the only source of fuel. This will increase the demand for LPG/LNG carriers and the shipbuilding companies in China should focus more on the manufacturing of such carriers instead of focusing on the declining bulk-carrier manufacturing industry.

China Shipbuilding Market Segments

Bulk carriers have accounted for the major share of the shipbuilding activities in China attributable to the commodity boom in the past, for instance, coal and iron ore The government is trying to boost the cruise ship manufacturing in China by tying-up with the leading foreign players for instance, Fincantieri. There has been a transition in the shipbuilding industry in China with the production of dry cargo coming down significantly. 

China Ship-repair Industry 

China is considered as a low cost ship-repair market in the world. This is mainly because of the lower administrative costs and wages in China. The highest price registered in China is ~% cheaper than the lowest price registered in South Korea. On an average it takes around USD ~ for a general dry bulk cargo ship to get repaired in China whereas the same ship is repaired at more than USD ~ in Japan mainly because of the higher steel prices in Japan. This clearly highlights that ship repair industry in China has the potential to compensate the downturn in the new shipbuilding market.

Competition

The shipbuilding industry in China is dominated by the state-owned companies: China Shipbuilding Industry Corporation (CSIC), China State Shipbuilding Corporation (CSSC), CIMC Raffles, COSCO and China Merchants Industry Holdings Co. Ltd. (CMIH). Out of these five forces, CSIC holds a major share of ~% in 2015 followed by CSSC. Apart from these, some private players are also operating in the China shipbuilding market. But environment for private companies in the China shipbuilding industry has never been as supportive and has become worse in the recent times. Private players captured a minimal ~% share in the total revenues in 2015. 

Future Outlook

The future outlook for the Chinese shipbuilding industry is also contingent upon the investments in the infrastructure segment by the countries which are considered as untapped markets by the Chinese maritime analysts for instance, countries in central Africa and Latin America. If these countries do not have the necessary infrastructure required at the ports, the Chinese shipping industry will not have new orders from the owners of ships in such untapped market. The shipyards have to become more technologically advanced so as to attract the next generation of maritime professionals. China is already suffering from a huge industrial and infrastructural overcapacity, high public debts and slower economic growth which could again become a hurdle in the improvement of China Shipbuilding Industry. 

Key Topics Covered in the Report

  • China Shipbuilding Industry Introduction and Size
  • Value Chain Analysis of China shipbuilding Industry
  • China Shipbuilding Industry Segmentation By Type of Ships (Gas carriers, Bulk carriers, Dry cargo, Tanker, Container, Passenger and others); By New Ship and Repair Services; By Regional Manufacturing Clusters; By Ownership
  • Military Shipbuilding Industry in China Shipbuilding Industry
  • Growth Drivers and Trends in China Shipbuilding Industry
  • Customer Base for China Shipbuilding Industry
  • Ship-Repair Industry Market Size by Revenues and Number of Ships Repaired in China
  • Ship-Repair Market Segmentation by Type of Repair Work in China
  • Market Share of Major Players in China Shipbuilding Industry
  • Company Profile of Leading and Failed Players in China Shipbuilding Industry
  • SWOT Analysis of China Shipbuilding Industry
  • China Shipbuilding Industry Future Outlook and Projections
  • Cost Analysis for Manufacturing of Ships in China Shipbuilding Industry
  • Analyst Recommendation
  • Macro Economic Variables Impacting the China Shipbuilding Industry

 

For more information on the report, refer to the below link:

https://www.kenresearch.com/manufacturing-and-construction/infrastructure/china-shipbuilding-market-statistics/42910-97.html

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

...

Read more…