It is a dominant view that China’s taking the top place in shipbuilding industries from Korea, having been no.1 for 10 years, does not have significant meaning, considering the absolute downturn of shipbuilding industry last year.

According to Clarksons statistics, Korea received orders for 113 ships of 3,154,721 CGT while China securing orders for 191 ships of 3,492,435 CGT last year. It is 10 years after Korean took the first place over Japan in 2000.

However, this number does not have any significant meaning and there still exists huge gap between the two countries. An industry player said, “Last year was exceptional with absolutely small number of orders, hence it is meaningless to tell who got how much orders.” “The number of orders was less than the half of the constructed ship, so this numbers are meaningless.”

There are two major reasons China beat Korea last year.

According to the ‘Domestic Orders Placed at Domestic Shipbuilders’ principle following the government’s effort to promote shipbuilding industry, Chinese shipowners’ newbuilding orders accounted for 26% of the total orders of the world last year, most of which were received by Chinese shipyards under the government’s encouragement and support.

The other reason was that invigoration of shipbuilding finance backed by Chinese government. This finance supported domestic and overseas shipowners with many finances and tax benefits while global shipping banks sharply reduced finance for shipowners concerning shrinkage of shipping industry under the financial crisis last year.

Hence, it is highly likely that China will step down from its crown soon and it is expected to be back in place this year.

Korean yards’ order intakes are being reactivated as shipping industry recovers slowly this year. In addition, Korea gets to have price competitiveness over China influenced by currency exchange rate.

Domestic major shipbuilders maintained ‘holding out’ position as a measure against recession; Particularly Hyundai Heavy Industries and Samsung Heavy Industries had very little new orders last year.

An industry official said, “Recent currency exchange rate change resulted in price competitiveness for Korean newbuildings over Chinese in dollar terms.” “Once domestic shipbuilders set out to get new orders, they will be able to regain the dominance in new orders and orderbook in a short period of time.”

Source: Asiasis

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