CCTV Economic Information Broadcast: New Trends in the Shipbuilding Industry

After the Spring Festival, shipbuilding companies are "starting with a sprint," receiving new orders, focusing on production, and delivering new ships. Against this backdrop, what changes have occurred in the production sites of shipbuilding companies? Which ship types are more popular in the market?

【Liaoning Dalian: New shipbuilding orders have been scheduled three years out】

In a shipbuilding workshop in Dalian, Liaoning Province, a groundbreaking ceremony is underway for a 175,000-cubic-meter large-scale liquefied natural gas (LNG) carrier. Meanwhile, two kilometers away in a shipyard, workers are busy with production.

Jiang Yanling, Deputy Minister of China Shipbuilding Dalian Shipbuilding Platform No. 2: "We are currently in the ship assembly stage, with workers performing electric welding and grinding welds."

Jiang Hongliang, Minister of Production Management Department, China Shipbuilding Dalian Shipbuilding: "Our workforce return has reached 95%. In 2024, we plan to start construction on 31 ships, lay keels for 26 ships, conduct sea trials for 26 ships, and deliver 26 ships."

Executives from several companies told reporters that since the beginning of the year, the companies have received continuous large new orders, and current new ship orders have been scheduled until the end of 2027.

Peng Guisheng, Minister of Marketing Department, China Shipbuilding Dalian Shipbuilding: "We have signed contracts with two well-known European shipowners for 6+2 conventional fuel very large crude carriers (VLCCs) and 4+2 LNG dual-fuel VLCCs. Adding the recently effective order for 6 110,000-ton tankers, the total contract value has reached 15 billion RMB."

To ensure the smooth delivery of orders, shipbuilding companies have not only increased production personnel but also introduced intelligent and automated production equipment, significantly improving production efficiency.

Xu Yingchun, Deputy General Manager of Dalian COSCO Kawasaki: "This line is our automated welding line using robots. This equipment can automatically identify welds, and its efficiency is about 2.5 to 3 times that of manual welding."

In 2023, China further consolidated its position as a major shipbuilding country, with its market share ranking first in the world for 14 consecutive years. According to the latest forecast by the China Shipbuilding Industry Association, China's shipbuilding completion volume in 2024 will be around 45 million deadweight tons, and new orders will be around 55 million deadweight tons.

【The booming shipbuilding market drives the "upgrade" of supporting industries】

Shipbuilding is like building giant building blocks, requiring millions of parts to be efficiently and precisely assembled together. This also means that the shipbuilding industry has a huge industrial chain behind it. The continuous influx of orders for shipbuilding companies has also driven the rapid development of the shipbuilding supporting industry.

At a shipbuilding equipment company in Lushunkou Development Zone, Dalian, Liaoning Province, workers are performing post-welding assembly and heat treatment on container ship hatch covers. The on-site manager told reporters that in 2023, the company received 800 hatch cover orders, the highest peak since its establishment.

Ma Lei, Minister of the First Business Department, China Shipbuilding Dalian Shipbuilding Equipment Company: "Our current backlog of orders is full for 2024. A portion of 2025 orders are already scheduled."

The booming shipbuilding market has improved the revenue and profit margins of upstream and downstream supporting industries. The head of a company producing rudder systems told reporters that according to the current production progress, the company's output value is expected to exceed the initial forecast.

Chi Yong, Assistant General Manager of Nantong Ocean Shipbuilding Supporting Dalian Branch: "Currently, we are building dozens of rudder blade products simultaneously in our workshop. It is estimated that this year we will deliver approximately 88 rudder blades."

Zhu Guolin, Deputy Minister of the Business Department, Nantong Ocean Shipbuilding Supporting Dalian Branch: "From the year before last to last year, we have successively received orders for high-efficiency rudders for LNG ships, totaling more than 50 sets, which is equivalent to more than 100 rudder blades. Compared with conventional rudder blades, the efficiency can be improved by 10%-20%. "

【Rising Profitability in the Shipbuilding Industry】

The current shipbuilding market has entered a new round of upward cycle. Shipbuilding companies have full order books, and ship prices are also rising. So what will be the future market trend?

Reporters learned during interviews that with the increase in shipping demand, the aging and renewal of fleets, and new energy regulations, shipowners have continued to place orders this year. Many shipbuilding company executives said that the shipbuilding market is showing a state of supply shortage.

Cao Bing, Minister of Shipbuilding Engineering Affairs Department, Dalian COSCO Kawasaki: "After new shipbuilding orders are released, if you want to obtain actual shipbuilding orders, the corresponding price will increase accordingly. Therefore, the current shipbuilding market is still mainly driven by shipyards."

Company executives said that the situation of shipyard supply shortage is difficult to change in the short term, so this year, when negotiating with downstream shipowners, everyone's psychological expectations have generally increased.

Peng Guisheng, Minister of Marketing Department, China Shipbuilding Dalian Shipbuilding: "Compared with the same period in 2023, our personal expectation for the gross profit margin of new orders has increased by about 3-4 percentage points. On the other hand, the batch characteristic of orders is particularly obvious, which provides a guarantee for the continuity of the production cycle."

As of March 1, 2024, the Clarkson newbuilding price index closed at 181.45 points, up 10.4% year-on-year.

Data from the China Shipbuilding Industry Association shows that in 2023, large-scale shipbuilding enterprises nationwide achieved a main business income of 623.7 billion yuan, a year-on-year increase of 20.0%; and a total profit of 25.9 billion yuan, a year-on-year increase of 131.7%.

Li Yanqing, Secretary-General of the China Shipbuilding Industry Association: "The ship price index has reached a new high in the past 15 years, and the average industry profit margin has reached 4.2%, an increase of two percentage points from last year. Looking forward to the next few years, with the delivery of our high-priced ships, the overall industry profit level will further improve."