China's Shipbuilding Industry 2018-2022: Increasing Global Investment In Oil & Gas Development
The global market share of China's shipbuilding industry rose significantly from 2007 to 2017. In 2017, the quantity of completed ships was 42.68 million DWT, increasing by 20.9% YOY; the quantity of new orders was 33.73 million DWT, increasing by 60.1% YOY.
China's shipbuilding industry captured the largest global market share in all the three major indicators with the quantities of completed ships, new orders and orders on hand accounting for 41.9%, 45.5% and 44.6% respectively of the global total. China has become one of the most important shipbuilding centers in the world.
As a typical cyclical industry, shipbuilding is closely related with global economic environment and shipping market. For example, the financial crisis in 2008 had a profound influence in shipbuilding, which urged the global shipbuilding industry to cut overcapacity and carry out transformation and upgrading.
Since 2013, the quantity of new orders has been declining and the quantity of orders on hand has declined for four consecutive years, which reduced the capacity from 80 million DWT in 2012 to 65 million DWT at the end of 2015. At the end of 2017, the quantity of orders on hand was 87.23 million DWT, falling by 12.4% YOY. As the quantity of orders on hand has declined for four consecutive years, most shipbuilders can only maintain a workload of about one year
In 2017, new orders tended to concentrate in dominant enterprises. The top 10 shipbuilders accounted for 73.4% of the total quantity of new orders and 58.3% of the total quantity of completed ships. Four Chinese shipbuilders ranked among the global top 10 by the quantity of new orders, and five Chinese shipbuilders ranked among the global top 10 by the quantity of completed ships.
In 2017, the prices of upstream raw materials, human cost and financing cost kept rising while the increase in ship prices was little. Therefore, the profitability of Chinese shipbuilders was still low.
From 2018 to 2022, the global economy and the global shipping market are expected to grow, which will lead to a rising demand for new ships. Meanwhile, the increasing global investment in oil and gas development will require more offshore oil and gas platforms and promote the development of offshore wind farm equipment and LNG related equipment.
It is expected that the export volume of China-made ships will continue to grow from 2018 to 2022 because China's shipping industry has certain cost advantage on the international market.
