Shipbuilding enterprises continue to decline, the ship market recovery is nowhere in sight

Editor's Note: It is an indisputable fact that China's shipbuilding industry is in trouble. As ship prices continue to fall, shipbuilding companies have no profit or even losses, and companies with negative profits are gradually growing. Since last year, shipbuilding enterprises in Jiangsu, Zhejiang, Fujian, Shandong and other major shipbuilding provinces have been in trouble. Although the number of new orders has rebounded this year, industry insiders said that the current order volume has changed from the low level of last year, but only the new ship volume has exceeded the shipbuilding completion volume in the same period, and the hand-held order volume has started to rise. The price of the ship has stabilized and the shipowner has picked up the ship on time. This is the market recovery. At present, the situation facing the shipbuilding industry is not optimistic. Recently, the China Shipbuilding Industry Association announced the economic performance of the shipbuilding industry in the first half of the year.

On July 18, the China Shipbuilding Industry Association announced the economic operation of the shipbuilding industry in the first half of 2013. According to the published situation, in the first half of this year, the main shipbuilding indicators and economic indicators of China's shipbuilding industry continued to decline; enterprises are difficult to deliver, difficult to receive orders, difficult to finance, and difficult to earn profits; the risks and challenges facing shipbuilding are increasing. International competition is more intense.

From the specific data, from January to June, the national shipbuilding completed 20.6 million deadweight tons, down 36% year-on-year. The new ship's orders were 22.9 million DWT, an increase of 113.2%. At the end of June, the number of ships holding orders was 108.98 million DWT, a year-on-year decrease of 13.4%, an increase of 1.9% over the end of 2012. According to the statistics of Clarkson in the United Kingdom, China's shipbuilding completion volume, new orders, and hand-held orders accounted for 39.1%, 44.2%, and 43.1% of the world market share, respectively. From January to June, the country's completed export ship was 17.28 million DWT, down 34.4% year-on-year; the export ship orders were 21.04 million DWT, up 163.3% year-on-year; at the end of June, the export ship orders were 95.14 million DWT, down 11.3% year-on-year. Export ships accounted for 83.9%, 91.9% and 87.3% of the national shipbuilding completion, new orders, and hand-held orders, respectively.

In terms of enterprises, from January to June, 80 key monitoring enterprises in the shipbuilding industry completed a total industrial output value of 171.9 billion yuan, a year-on-year decrease of 16.6%. Among them, shipbuilding enterprises were 88 billion yuan, down 31.2% year-on-year; ship supporting enterprises were 12 billion yuan, down 27.3% year-on-year; ship repairing enterprises were 5.46 billion yuan, down 8.5% year-on-year. From January to June, 80 key monitoring enterprises in the shipbuilding industry completed export delivery value of 78.4 billion yuan, a year-on-year decrease of 24.7%. Among them, the shipbuilding industry was 71.1 billion yuan, down 26.5% year-on-year; the ship supporting industry was 2.32 billion yuan, down 20.7% year-on-year; the ship repair industry was 3.4 billion yuan, down 20.9% year-on-year. From January to June, 80 key monitoring enterprises in the shipbuilding industry achieved a revenue of 120.3 billion yuan from the main business, down 18.5% year-on-year; total profit was 3.58 billion yuan, down 53.6% year-on-year.

Analysis of the above data shows that, except for the year-on-year increase in new orders data, other data will decline year-on-year. According to the analysis of the China Shipbuilding Association, the reasons for the sharp increase in world new ship orders in the first half of 2013 are as follows: First, the world shipbuilding market in 2012 Extremely depressed, the rebound in volume in 2013 is from the bottom to the normal state; second, some ship owners adapt to market changes, structural adjustment, business transformation needs; Third, in the face of the bottom of the ship price, there are some cyclical investments The speculators booked the ship. However, China Shipbuilding said that the current world economic recovery is weak, the supply and demand relationship in the shipping market has not improved, and the new ship price and volume do not support the judgment of the ship market recovery.

It is worth noting that since the beginning of this year, the ship market has continued to be sluggish, and the price of new ships has been at a low level. According to the current ship price index, China’s shipbuilding enterprises have basically no profit from operating orders. At the same time, China's labor costs continue to rise, raw material prices remain high, financing costs have increased substantially, shipbuilding companies' cost costs have risen rapidly, and ship prices and cost costs are inconsistent. Statistics show that from January to May, the main business income of the shipbuilding industry decreased by 4.5% year-on-year, management expenses increased by 2.9% year-on-year, and financial expenses increased by 1.1% year-on-year; corporate accounts receivable amounted to 98.7 billion yuan, an increase of 8.3% year-on-year, resulting in industry profits. The total amount has fallen sharply. In addition, the financial institutions' monetary tightening of monetary policy, the deterioration of the financing environment, the depreciation of the yen and the appreciation of the renminbi have all impacted China's shipbuilding industry.

A few days ago, China’s largest civilian shipbuilding company, Rongsheng Heavy Industries, had severely laid off employees, which triggered a hot debate in the industry. Industry analysts said that as a long-cycle industry, the shipping industry, which is in a downturn, will not be able to see any improvement in the next few years. The continued downturn in the downstream market is bound to be transmitted to the upstream shipbuilding industry. In the case of reduced orders, in order to reduce expenses, the shipbuilding industry layoffs will tend to be normal. In the context of the restructuring, appropriate tightening of liquidity funds will become the keynote of the future central bank's monetary policy. Therefore, even if the so-called “money shortage” ends in this round, some of the inter-bank idling funds flow into the physical field and fall into a depressed ship. It is still difficult for enterprises to obtain sufficient credit funds.

In addition, with the introduction of new regulations and new standards of the International Maritime Organization, the ship market demand structure has changed significantly, and various backbone shipyards have accelerated the research and development of mainstream ship type optimization and upgrading, high-end products and offshore equipment. In the face of new design products, high-difficult products, and insufficient production technology preparation cycles, the company has begun to expose problems such as lack of technical strength, weak research and development capabilities, tight production technology preparation, frequent design process changes, and ship construction risks. Large, transformation and upgrading are difficult. The China Shipbuilding Association said that due to the impact of the financial crisis, China's shipbuilding industry has experienced a period of rapid development after nearly a decade of rapid development, which is an inevitable reflection of the development of the ship market, and also the adjustment of product structure. Promote technological innovation, improve management, and save the key period of strength. With the sharp depreciation of the yen and the Korean won and the continuous appreciation of the renminbi, technical strength and cost control have become the key to market competition. The long-term downturn in ship prices has led to limited profitability for shipyards. Increasing shipbuilding efficiency and reducing shipbuilding costs are the shipyards’ wins. Price advantage and the key to increasing profitability. China's shipyards should strengthen the research and application of new technologies in the fields of safety, energy conservation, high efficiency and environmental protection, speed up the optimization and upgrading of mainstream ship types, seize the technical commanding heights, and improve the comprehensive technical and economic performance and market competitiveness of ship types. Improve cost control by reducing design costs, procurement costs, manufacturing costs, and kinetic energy consumption. Establish an early warning mechanism for exchange rates, and use financial instruments such as long-term foreign exchange settlement, swap and export insurance to reduce exchange rate risks.

At the same time, the China Shipbuilding Association also hopes that the state can further increase scientific research funding support for green and environmentally-friendly ships, high-tech ships, offshore engineering equipment and key supporting equipment and systems, and guide the research and investment of research institutes and enterprises; The key components of the construction and import of products can implement appropriate tax reduction and exemption policies to improve the international competitiveness of enterprises. It also calls on financial institutions to conduct in-depth research and evaluation of enterprises, and to provide financing support for the financing needs of key enterprises in the industry with more hand-held orders, stronger technical capabilities, better production management, and better product quality. Adopting the policy of “excessive tightening” and reluctance to lend to help these enterprises tide over the difficulties. In addition, relevant state departments have issued documents such as “Accelerating the Merger and Reorganization of Key Industry Enterprises and Guiding Opinions”, and proposed the direction of merger and reorganization of the shipbuilding industry in the next three years. It is clear that it is necessary to control the total production capacity and optimize the production capacity structure. Eliminate backward production capacity and guide powerful enterprises (groups) to carry out mergers and acquisitions across regions, industries and sub-owners. In order to promote the orderly work of the work, the China Shipbuilding Association hopes that the competent authorities of the government can formulate implementation rules for the actual situation of the industry, encourage enterprises to carry out mergers and acquisitions, and provide preferential policies and support in the areas of finance, taxation and financial services; properly handle mergers and acquisitions. Withdrawal or transformation of enterprise personnel placement, asset disposal, debt processing and other issues, to achieve the ship industry effectively resolve the contradiction of overcapacity, optimize industrial layout, improve industrial concentration, and promote healthy development.