Ship orders drop for 11 consecutive months

The shipbuilding industry has yet to bounce back from the global economic downturn as orders have dropped for 11 consecutive months, the latest report stated. According to a report released by the China Association of the National Shipbuilding Industry (CANSI) over the weekend, as of the end of August, the number of ship orders on hand was down by 6.8 percent in terms of tonnage from the beginning of this year, or a 0.8 percent drop from the end of July.
The nation's shipbuilding industry, which ranks second in the world in terms of tonnage and number of vessels built, has deteriorated since last September as new orders shrank and vessel prices dropped.
In the first eight months of this year, industry production was up 58 percent year-on-year, compared with an annual drop of 82 percent in the number of orders, according to the report.
CANSI said most orders on hand will keep shipmakers busy until the end of 2010 or the first half of 2011, and some shipmakers may be running below capacity in the second half of this year.
Wang Wenzhen, vice general manager of Yangzijiang Shipbuilding, a top 20 shipmakers in China, said this year the company plans to delivery 40 ships, but there have been no new orders in the first half of this year.
To deal with the increasingly worse situation, CANSI recommends the government release the details of the shipbuilding stimulus plan, and to have strict control over investment in fixed assets to prevent possible over supply.
However, Qian Xinnan, deputy secretary general of CANSI, told the Global Times yesterday that "the performance of the shipbuilding industry this year will not be better than last year," although the time it takes to build a ship lasts around two years.
The fortunes of the shipbuilding industry is directly related to the global performance of shipping, and shipping companies in European countries are not placing as many orders as before, said Qian.
In August, the weekly Clarkson Index, a measure of prices for all vessel types, was down from the record 190 set September last year to 120, a drop of 32 percent.
As of the end of last month, 20 percent of ships on which construction has not yet begun, and 10 percent of ships being built have been delayed, said the report.
Moreover, CANSI's Qian said that although there are some shipmakers reporting new orders, it is a "temporary" trend that will not be maintained for the long-term.
"In general, the nation's shipping industry is still weak, and it is hard to predict when it will recover," warned Qian.