News: China Preps To Take World Lead

Tuesday, February 10, 2004

Rapidly rising prices for steel plate in China may be taking the edge off the financial performance at some Chinese shipbuilders. But it will take a lot more than that to undermine shipyards' dramatic expansion plans aimed at ensuring the country's builders produce more ships than any other nation by 2015. In the short run, however, the country's relatively inexperienced builders seem to have failed to read the steel supply signs. They have found themselves caught out by a number of factors driving up ship steel prices. These have risen by almost 60% over the last 30 months or so and now stand close to $400 a ton.

On the one hand, soaring steel demand in other sectors of the Chinese economy has left the country's steel producers with a choice of market outlets — wide steel plate used in the shipbuilding industry is not its product of choice. Meanwhile, shipyard marketing teams were very successful during 2003 in booking large numbers of export contracts at prices significantly below those prevailing in South Korea and Japan. And furthermore, Chinese demand for iron ore and coal is rising so fast that foreign suppliers have negotiated hefty increases in supply contract prices from early this year. Steel prices in China are likely to rise further, some analysts believe.

Despite past criticism for a lack of expertise in more sophisticated ship types, a tendency to cut corners resulting in reduced quality and a liability for delays, Chinese shipbuilders have now won a serious following amongst international shipowners. And the proof of the pudding, as the saying goes, is in the eating. International owners would not return to build ships in China if they were dissatisfied with the product. In exchange for lower prices, many owners are quite prepared, and indeed expect to pay more for their technical personnel to monitor and supervise during the construction process. And, some say, there is more flexibility at production level in Chinese yards than at some other Asian builder. Technical types maintain that negotiating any adjustments to ship specifications is not as difficult in China, and certainly doesn't cost as much as it would in one of the world's principal building yards in South Korea, for example. A quick analysis of the ownership of ships currently under construction at Chinese yards reads like a who's who of world shipping, or at least of German shipping. Amongst other international names are Bernard Schulte, Bockstiegel, A.P. Moller, Torm, Stena Bulk, Bocimar, D'Amato, Egon Oldendorff, Peter Dohle, Rickmers, Schoeller Holdings, Leonhardt & Blumberg, Nordeutsche Vermogen, Everard & Sons, Briese Schiffahrts and Hermann Buss. Norden, Nomikos, Van Ommeren, NYK, MOL, Thenamaris, Wah Kwong and Graig are also on the list. There are now more than 25 shipyards building ocean-going tonnage, and many other smaller facilities engaged in the construction of small specialised craft such as dredgers, cable layers, supply vessels and survey ships.

But Chinese builders are focusing on gearing up to build market share in tankers, bulkers and container vessels. The National Iranian Tanker Company is amongst other owners building VLCCs at Dalian New Shipbuilding whilst China Shipping Group has at least a dozen large container ships contracted at Hudong Zonghua. This Shanghai facility has an orderbook of some 50 ocean-going vessels, the largest being two Aframax tankers for Vancouver-based Valles Steamship. Meanwhile Shanghai Waigaoqiao has 12 Capesize on its books for owners including Bocimar and Cardiff Marine, together with a further seven 105,000 dwt Aframax tankers.

As the Chinese shipbuilding dream becomes a reality in the months ahead, management systems constitute a key challenge. Already some of the leading yards are linking pay rates to efficiency, productivity and quality. But as more ships are completed under the watchful eyes of foreign supervisors, shipyards elsewhere in Asia would do well to keep their eye on the young shipbuilding dragon.

Maritime Reporter March 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Shipbuilding

Shipping Turns From Banks to Equity Markets for Cash

Shipping companies are turning to equity markets to fill a growing funding gap, betting that investors hungry for decent returns will provide capital to a sector

Keel-Laid for Navy's 10th LCS at Austal Yard

The Navy and Austal USA held a keel-laying ceremony for the future 'USS Gabrielle Giffords', the Navy's 10th littoral combat ship (LCS), in Mobile, Ala., informs

Homeland Security Secretary Visits Ingalls Shipbuilding

Huntington Ingalls Industries' Ingalls Shipbuilding division apprises it has hosted a visit by Secretary of Homeland Security Secretary Jeh Johnson and U.S. Rep.

Energy

PetroVietNam Gas's Q1 gross profit falls 27.5%

PetroVietNam Gas's first-quarter gross profit fell 27.5 percent to 3.9 trillion dong ($185 million) from a year earlier, the Lao Dong (Labour) newspaper reported.

Beijing's bid to move polluting firms adds pressure on nearby regions

China's capital has ordered more than 50 companies to shut down this year in an effort to cut pollution but pushing factories out could raise objections in surrounding

Apache CEO, Vermont activist build alliance on climate issues

Steve Farris runs a $33 billion Texas oil and gas company and turns, for advice, to a bearded Vermont environmentalist. As other energy firms battled climate change

 
 
Maritime Contracts Maritime Standards Naval Architecture Pipelines Pod Propulsion Port Authority Ship Electronics Ship Repair Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1079 sec (9 req/sec)