It is reported that during “China Shipbuilding Steel Supply and Demand Summit” held recently in Shanghai, attendees all believed the shipbuilding steel would see severe over supply this year as shipyard"s orders decline sharply and new shipbuilding steel capacity increase evidently. They predicted the over supply would reach as much as millions of tonnes.
Mr Tan Naifang with China Association of the National Shipbuilding Industry said the maximum shipbuilding steel demand in 2010 would be 20 million tonnes, but the output of China shipbuilding steel reached 20.14 million tonnes in 2008 up by 63% from the previous year. And another several new production lines would be put into operation this year, hence the situation would be even tougher.
It is said shipyard would see delivery delay or contact cancellation this year. In addition, over 60% of this year"s contracts are bulk cargo ships which demand comparative less steel. Meanwhile, the steel demand from ship maintenance and modification sectors also decrease markedly. Therefore, insiders anticipate the shipbuilding steel demand will stay at 13.3 million tonnes of which 11.7 million tonnes are shipbuilding plate.
Mr Tan Naifang said the price of new ship is going to decrease continuously as the current shipping capacity is over the demand. And almost half of the contracts are facing capital-raising difficulties. It is predicted China could only receive 20 million DWT 30 million DWT of new ship orders in 2009 with the holding orders drop to 160 million tonnes.
The demand of shipbuilding plate, the major raw materials of shipbuilding, has plunged dramatically since the 2nd half of last year and the price then dropped continuously. Many shipbuilding plate producers are willing to switch their productions to common medium plate as they are suffering losses at the moment, but the price of common medium plate is also likely to further drop.
The shipbuilding plate export also shrinks. The demands from South Korea and Vietnam drop largely as shipyards in the countries all face difficulties. And companies like POSCO and JFE all cut their shipbuilding plate price, making the export harder.
An insider said to tackle the severe challenges many shipyards have turned their attentions to the ocean project such as offshore oil platform.