October 11, 2008

Ship orders volumes have to slow down in 2008 - Lloyd Register

According to Lloyd's Register Group, global ship orders may plunge more than half this year after optimism about world trade and China's need for raw materials caused demand to surge in 2007. Mr John Stansfeld president of Lloyd's Asia in an interview in Shanghai said that "It simply can't carry on at the unprecedented rates of last year. It has to slow down.”

According to Clarkson Plc, Orders for vessels to carry fuel, iron ore and consumer goods have all cooled this year amid concerns about a global slowdown and the subprime mortgage crisis. Hyundai Heavy Industries Co, the world's biggest shipbuilder, and other yards won a record 246.3 million deadweight tons of orders last year, 43 % more than in 2006.

Mr Lee Jae Won a Tong Yang Investment Bank analyst in Seoul said that “Uncertainty in the global market is making shipping lines hesitant about ordering more vessels. Still, shipyards have a backlog of almost four years and ship prices remain at record levels, so it's still a shipbuilders' market at the moment.''

According to London based Clarkson, the price of a ship able to carry 6,200 20 foot containers reached USD 107 million at the end of March from USD 106.5 million at the end of last year. The price of a 300,000 DWT oil tanker rose to USD 152 million last month from USD 146 million last year.

Mr Stansfeld said that South Korea, the world's largest shipbuilding nation, also faces rising competition from China, which is aiming to make more complex and profitable vessels. China surpassed Japan as the world's second biggest shipbuilder in 2006 and may rank first by 2015.

He added that “For China to get to the top of the industry, it needs to diversify its vessel types. It will take a great deal of effort to get to the same level'' of sophistication as Japan and South Korea.