News

Chinese too Early to Recover?

2013-06-24
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Amid global newbuilding orders going upwards, Chinese shipbuilding is suggested that it is early to expect market recovery despite increases in order intakes.
Recently, China’s National Business Daily pointed out that although newbuilding contracts have increased year to date somewhat more than last year’s, ship values keep staying at a historic low that yards are still under pressure because the ratio of advance payment made by owners declined by 20-30%. Apart from “Bankruptcy Boom” of small and medium sized yards, several large builders are also confronting financial problems, the news reported.
Zhang Guangqin, Chairman of the China Association of the National Shipbuilding Industry (CANSI) said through an interview on June 18 that the new order increase does not always mean a market improvement. The current state of offshore sector is relatively favorable but demand high technical skills, while newbuillding prices are too low.
As shipbuilders face with decreasing contracts in traditional business with declining profits, transforming a business into offshore area is regarded as an essential, however, Zhang said that builders need to take it slow rather than signing deals blindedly considering low prices of recent offshore platforms.
An analyst in Chinese Investment industry said, “Offshore is believed to be a yardstick of economic development from now on. The area is excessively booming now with advances of not a few shipbuilders however the offshore area requires high technical skills which hinder entrances of most companies. Even a company successfully enters into the area, a new problem is likely to appear, how to be more competitive.”  
A professional in Chinese industry said that offshore sector has a high entry barrier of technology. He pointed out that Chinese builders are usually winning and building offshore supply vessels, particularly jack-up rigs, but this is a different issue from deep-sea drilling platforms which require more complicated construction processes.

Source:Asiasis