Thursday, May 12, 2011

Drillship orders to hit 30

Drillship newbuilding orders are expected to hit record-high this year.

To date in 2011, 17 drillships were inked worldwide, all at South Korean big 3 shipbuilders.

Samsung Heavy Industries booked seven, Hyundai Heavy Industries six and Daewoo Shipbuilding & Marine Engineering four.

The figure is already nearing 19 orders recorded in the entire 2008.

Considering optional contracts and expectation that drillship orders would go on amid high oil prices, new record of drillship orders looks almost certain for 2011.

Industry pundits forecast drillship order binge to reach 30.

Samsung and Daewoo have four optional contracts each and Hyundai has three optional orders.

Hyundai is also expected to sign a LOI for two drillships with Norway's Odfjell Offshore.

Meanwhile, some claim that drillship order spree is nearing to an end as speculative orders related to Brazil's Petrobras are not expected to continue any further.

Published : May 12, 2011

Source: Asiasis



China to step up shipbuilding

China's shipbuilding industry is large but not strong, and independent innovation and establishing an integrated industrial chain are top priorities, an official told.

"Although China overtook South Korea and Japan to become the world's largest shipbuilder in terms of shipbuilding capacity, overtaking orders and new orders, the country's high value-added shipbuilding ability is far behind the two countries," Qian Xinnan, deputy director of the China Association of the National Shipbuilding Industry (CANSI), said.

China has been the world's largest shipbuilder since 2010.

Statistics filed with the Ministry of Industry and Information Technology show from January to December 2010, China's shipyards produced a total volume of 65.6 million deadweight tons, an increase of 54.6 percent from the previous year. And their newly received orders as of the end of last year exceeded 75.23 million deadweight tons, accounting for 54 percent of the world's total production volume.

"We must recognize the data is just about the volume of deadweight tons (a ship's carrying capacity with crew and supplies), not about their total value (the ships)," Qian said.

In the first quarter, South Korean shipbuilders signed new orders for 90 ships with a total worth of $12.8 billion. China received orders for 88 units with a total value of only $3.5 billion, according to the latest data from South Korea's Ministry of Economic Knowledge.

"China should complete its whole oceaneering chain, including the high-tech corollary equipment used on ships," Qian said.

"Some automated electronic devices on China-made ships, for instance, are still imported from overseas," he told。

After years of development with the advantage of low labor costs, China's shipbuilding industry entered a period requiring more initial investment and intensive management. So, a significant amount of money needs to be invested in R&D during the process, with less consideration for short-term returns, according to Qian.

Qian also encouraged domestic shipbuilders to look "positively" for outbound investment opportunities and study advanced technology, citing an acquisition case between Chery and Volvo as a successful example of a domestic manufacturing company going outside the country.

"So far, few Chinese shipbuilders have begun outbound expansion while South Korea, for instance, is cooperating with countries like Russia and Brazil," Qian said.

China's shipping industry will experience a structural readjustment during the 12th Five-Year Plan period (2011-2015), Qian said.

Published : May 12, 2011

Source: Asiasis

Overcapacity to lead to price fall?

As new ship orders appear to be slowing down following last year’s rebound and deliveries might have passed their peak, the challenge for shipbuilders in filling the expanded global capacity will begin to loom larger.

The urgency is still a little way off as the order backlog remains enormous by any historic standard, at over 400m dwt.

But such has been the expansion in capacity and the employment issues that go with it, especially in China, that the pressures to fill that capacity could have a significant effect on owners’ decisions.

It is clear that China’s market share is continuing to rise, mainly at the expense of Japan, but it is also increasingly battling with South Korea for more sophisticated and high value orders.

Speaking last weekend at a conference in China, Li Dong, vice-director of the equipment industry department of China’s Ministry of Industry and Information Technology, was reported as commenting that having become the world’s leading shipbuilder, China aims to become the leading builder of the most advanced ships by 2015, in accordance with the government’s current five-year plan.

He accepted that China still lags in terms of innovation and technology but it is making big strides in improving quality to follow its rapid rise in quantity. Chinese yards have already started to win orders for large hi-tech ships that until recently were considered the preserve of more advanced yards in Japan and South Korea.

Clarksons reported that new orders placed so far this year are running some 38% down on the same period in 2010 in compensated gross tonnage. This is partly due to the perceived risk of overcapacity and also due to greater caution by finance providers.

Some $24.7bn of new orders was contracted in the first three months of this year, a trend which if continued would mean about $100m being placed in the full year and more or less the same as in 2010. However, this must be considered in the context of lower newbuilding prices, which suggests that the volume of contracting could be even higher than last year.

Clarksons also pointed out that newbuilding output has started to decline from its peak in the third quarter of 2010, at 13.8m cgt with China producing some 5.2m cgt in that three-month period. In the first quarter of this year output eased to 10.3m cgt.

Clarksons commented that these trends mean that shipyard capacity is a big issue for owners and shipbuilders as yards try to attract new orders while owners face the dilemma of whether to succumb to the temptation of lower newbuilding prices being offered.

But the growing overcapacity in global shipbuilding is likely to lead to further price falls. Newbuilding prices increased slightly, having bottomed out in early 2010, and then appeared to stabilise, but recently there are signs that prices are easing again, although so far not dramatically.

Published : May 12, 2011

Source: Asiasis

S&M transferring to other businesses

In order for the shipbuilding industry in South Jeolla Province, South Korea, to get out of the stagnant market, transferring to other business types and improving relevant infrastructures are urgently needed, experts said.

Based on the analysis, shipbuilders in the Province started to conduct in-depth study to transfer to other business types.

In the Province, there are a total of 56 shipbuilders (accounting for 14% in shipbuilders nationwide), including two major shipbuilders and seven medium-sized shipbuilders, and about 220 marine equipment plants.

They suffer from triple difficulties; corporate restructuring, lack of new orders, and poor profitability due to low newbuilding prices.

While shiprepair of medium and large sized vessels, in particular, are commissioned most to China's shipbuilders, citing the high labor costs, shiprepair of small vessels of 20,000 tons or under are only commissioned to domestic shipreapir companies.

Also, although ports like the Gwangyang Port and the Mokpo Port are accessible for many ships and adjacent areas like the Yellow Sea have a lot of sea routes, there are not places spacious enough to place and repair large vessels in.

Thus, many people involved in the industry say the infrastructure need to be improved.

Therefore, medium sized shipbuilders consider feasibility of transferring to shiprepair businesses, and small shipbuilders and marine equipment companies transferring to marine leisure and plant equipment businesses.

Published : May 12, 2011

Source: Asiasis


Wednesday, May 11, 2011

Keppel rig delay spreads

Singapore's Mermaid Maritime has warned investors of Keppel FELS’ intent to declare force majeure on a jack-up drilling rig ordered by affiliate Asia Offshore Drilling (AOD). 

The Singapore-listed offshore contractor says its drilling division received a notice on 6 May that read: “The earthquake and resulting natural disasters which hit Japan on 11 March 2011 will lead to a force majeure event arising under the construction contracts for AOD’s two rigs: rig Hull-B320 and rig Hull-B321.” 

AOD expects the delivery of one unit to be pushed back to 15 April 2013, a six-week delay. 

It says “there is no foreseeable change in the delivery date” of the remaining rig, which is scheduled to hit the water in December 2012. 

On 12 March Keppel FELS warned some of its customers that deliveries may be postponed following what has been described as “a delay in delivery of certain steel material arising from the events in Japan”. 

Its not clear how many orders have been impacted but just last week, Discovery Offshore said the construction of one its jack-up newbuildings had been stalled by nearly two months.

Published : May 11, 2011



China backs private yards

Privately-owned Chinese shipyards are not under threat from closure, and, just like state-owned facilities, are receiving support from the country’s government to keep employment high and the economy moving. 

In contrast to the widely held view in the maritime industry that as newbuilding orders dry up, private yards will struggle to find business, Keen Maritime Services managing director John Su says the Chinese government is so concerned about unemployment it will not let these facilities fail.

As a Chinese-born broker and consultant that is based in Athens, he is the middle man for a number of foreign deals taking place but is also is heavily involved with China’s domestic market and says its banks are so influenced by central government they will continue to lend to shipbuilding yards and owners to sustain a robust economy. 

“The government doesn’t care about owners and overcapacity, they care more about jobs and the economic fallout from a yard collapsing and so even the private yards will get support,” he told the Mare Forum Italy in Sorrento. 

Added to this, Mr Su says there is more domestic newbuilding ordering activity taking place in China than the rest of the world realises. 

“It’s scary to think but there are a lot of orders that are not known to brokers,” he said, making reference to a contract reported by brokers such as Clarksons last week for an order of two confirmed 205,000 bulk carriers, and options for six more, at Qingdao Yangfan Shipbuilding for owner HongXiang Shipping. 

“This order was already placed last year and is just one example,” highlighting the extent to which the shipping industry does not know the true size of the global orderbook.

Published : May 11, 2011



Big 3 top $20bn in orders

"Big 3" shipbuilders won newbuilding orders worth more than $20bn and continue to clinch more orders. 

In particular, new order value in the offshore sector accounted for 60% in all the new order value. The sector turned out to most benefit from continued high oil prices. Hyundai Heavy Industries won orders worth $9.6bn (38 ships, including orders won by Hyundai Samho Heavy Industries).       

Hyundai strategically has focused on new drillship orders (six ships) this year, while new order value in commercial ships only posted $3.3bn, new order value in offshore plants posted $6.3bn.     

Samsung Heavy Industries, which has taken the lead in the world's drillship market since 2000, has won a total of 30 ships, totaling $8bn, including 7 drillships orders, achieving 70% of its annual order target ($11.5bn).   

Whereas Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering won drillship orders for low-$500m mark each, Samsung has acquired drillship orders for near $600m each. It shows that Samsung concluded more profitable deals for drillships.     

On the other hand, Daewoo clinched 10 18,000-teu supersized containerships (plus options for 20 additional vessels) this year. Daewoo has acquired orders worth $3.4bn, including three drillships this year. 

Options for 20 18,000-teu vessels have been contracted. If all of the options are exercised, the order value in the commercial vessels is expected to surpass $5.4bn. 

The three shipbuilders have won orders worth $21bn until now this year, and they acquired orders more from the offshore plant sector ($12.5bn) than from commercial vessels ($8.5bn). The continued high oil prices is considered as the main reason for the good order performances.   

New order value won by the "Big 3" already reached about half of $42.3bn, their combined order target. It is two thirds of $31.5bn, which was the last year's new order value.   

The three shipbuilders are expected to win many new orders in the offshore sector, on the back of continuing high oil prices, and are forecast to achieve more than $50bn in new order value this year.

Published : May 11, 2011



Samsung inks further 13,000TEU‘s

Orient Overseas (International) Ltd said on Monday it has ordered four new containerships from South Korean shipbuilder Samsung Heavy Industries for a total of $544 million. 

The new order for the ships, which can carry 13,000 twenty-foot equivalent units (TEU) each, followed a deal between OOIL and Samsung signed in March to build six container vessels of the same size for $816 million. 

OOIL, a Hong Kong-based container shipping firm, was arranging bank financing to help fund the new order, it said in a statement with the Hong Kong stock exchange. 

The ships were expected to be delivered in 2013 and 2014. 

With the latest contract, Samsung has inked seven drillships, eight LNG carriers, 13 containerships, one offshore supply vessel and one FPSO worth $8bn in total so far this year, attaining 70% of its annual order target of $11.5bn.

Published : May 11, 2011



Chinese holding 190m DWT backlog

Chinese shipbuilders completed 14.46 million dead weight tons of shipbuilding orders in the first quarter of this year, remaining almost unchanged to the same quarter of 2010, according to statistics released by China Association of National Shipbuilding Industry or CANSI. 

Of the completed orders, 12.2 million DWT were for exports, accounting for 84.4% of the total. 

As of Mar. 31, China saw total shipbuilding orders reach around 190.04 million DWT in hand, up 3.2% year on year. Of the orders, 165.14 million DWT were for exports, accounting for 86.9% of the total. 

In the period from January to March, the country had 1,518 shipping companies above designated size, which saw the gross industrial output value increase 24.1% year on year to RMB 167.8 billion, including RMB 129.1 billion in shipbuilding, up 22.5% year on year. 

China exports US$10.05 billion worth of ships, boats and floating structures in the first quarter of 2011, 5.21% more than in the same month of last year, according to General Administration of Customs. 

Of the total export value, US$5.74 billion or 57.11% were the export value of dry bulk carriers. 

In the first quarter, the country saw its import value of ships, boats and floating structures increase 32.85% year on year to US$498 million. 

Reportedly, China canceled 21 shipbuilding orders, most of which were orders for dry bulk carrier building, totaling 1.08 million DWT in the first quarter of this year, dragged down by the sluggish shipping market and the shipping overcapacity of dry bulk carriers.   

Most of the shipbuilders also suffer cash shortage problems due to lower down payment for shipbuilding orders, said a person familiar with the matter as saying. 

However, the Chinese shipbuilders has focused on the research and development, and manufacturing of LNG carriers. 

The country's biggest shipbuilder China State Shipbuilding Corp or CSSC, the parent company of China State Shipbuilding Co Ltd, has started R&D on LNG carriers with maximum loading capacities up to 220,000 cubic meters. 

China Rongsheng Heavy Industries Group Co Ltd, China's largest private-owned maritime equipment manufacturer, is also said to be developing drillships and LNG carriers.

Published : May 11, 2011



Bharati secures site for new yard

India's Bharati Shipyard has finally broken the stalemate on land acquisition for its new yard in West Bengal. 

The company, in partnership with the Apeejay Group, had been frustrated in its ambitions for two and a half years. 

But now the venture's boss Sourav Daspatnaik said it was starting to buy land for the project. 

The news comes less than two months after Bharati chief PC Kapoor said the West Bengal yard, and one in Orissa, were on hold following problems with acquiring a site. 

“We have gone ahead with land acquisition, and the process is already quite ahead. We are committed to the project, otherwise we wouldn’t be having a big team now looking after it,” Daspatnaik told reporters. 

He added: “We need 500 acres and we can’t start work on the project unless we have possession of the full. 

“We are bullish about starting work in the next couple of months.” 

The Orissa project is still being held up by a row with the port of Dhamra, which is objecting to its location on 1,500 acres of land which it has eyed for its own expansion.

Published : May 6, 2011



Cosco boosted by yards

Cosco Corp (Singapore)'s first quarter profit was boosted by accelerating vessel deliveries. 

But the shipbuilder and bulker owner was hit by falling income from its dry-cargo fleet and has warned any recovery in the Baltic Dry Index this year will be stunted. 

Singapore-listed Cosco Corp bagged SGD 58.42m ($47.27m) in the opening three months of 2011, smashing the SGD 38.14m carded a year ago. 

It says the stronger showing was due to a rise in revenue, with its top line climbing by one fifth to SGD 1.01bn. 

Turnover at its shipyards jumped by over 20%, reaching SGD 990.2m this time around despite a dip in ship repair income. 

The division, which delivered seven bulk carriers in the quarter, has an order backlog valued at $5.9m. 

The start of 2011 has not been so rosy for Cosco Singapore’s dry-cargo shipowning division, which saw its turnover cut in half. Its fleet of 10 vessels contributed only SGD 17.3m in the quarter.

Published : May 9, 2011


Daewoo to continue sound results

Daewoo Shipbuilding & Marine Engineering (DSME) is expected to continue its sound operating results from the first quarter, achieving corporate growth thanks to its competitiveness in securing orders for the offshore production facilities.   

Dongbu Securities said that DSME's operating margin increased to the highest in Q1 on the back of evaluation profits on derivatives based on the International Financial Reporting Standards, etc. It added that DSME's operating margin stood at 13.8% in Q1 on IFRS, which was earnings surprise.     

The biggest reason for the profit margin increase is significant profitability improvement in offshore facilities sector. Because thick steel plates account for 5% or under in all the raw materials in the sector, sharp price hike in the plates didn't lead to increase in the production cost. This resulted in profitability improvement.           
"In particular, rise in orders for drillships and offshore plants, which will play a pivotal role in future growth, will enable the company to secure corporate growth and selectively choose the profitable newbuilding orders", he added 

Woori Investment & Securities predicted, "Based on the prediction of continued momentum in clinching orders for commercial vessels and in offshore sector and recovery in the newbuilding prices, rebound in the stock prices is expected for the company". 

It also added that due to the recovery in acquiring newbuilding orders and stably securing newbuilding orders will enable the company to continue sound operating results in the future.   

"Because DSME is expected to win additional new orders for LNG carriers, the company deserves positive evaluation. Its annual operating profit is likely to top KRW 1trn (USD $920bn), this year too," said Hi Investment & Securities.

Published : May 9, 2011



CEOs compete for orders in Norway

CEOs of South Korean shipbuilders will be headed for Norway to mastermind their companies sales activities respectively at the end of this month. 

CEOs of the "big 4" shipbuilders (Lee Jae-sung at Hyundai Heavy Industries, Roh In-shik at Samsung Heavy Industries, Nam Sang-tae at Daewoo shipbuilding & Marine Engineering, and Hong Gyeong-jin at STX Offshore & Shipbuilding) will participate in the Nor-Shipping that will be held in Oslo, Norway from May 24 to May 27. 

They will boast world class shipbuilding-related technologies in the world's largest shipbuilding exhibition and mastermind their companies' all out effort to clinch new orders. 

The exhibition will consists of 5 sections including 1) information technology & navigation, 2) safety & rescue, 3) shipbuilding & shiprepair, 4) propulsion & ship parts, and 5) marine logistics and services. About 1,100 companies are expected to take part in the exhibition from about 50 nations and regions. 

Along with the Korea Shipbuilders' Association, eight shipbuilders including Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding and Marine engineering, STX Offshore & Shipbuilding, Hanjin Heavy Industries & Construction, Hyundai Samho Heavy Industries, Hyundai Mipo Dockyard, and SLS Shipbuilding will take part in the exhibition. 

They will show world class high value added technologies such as drillships, the Floating Production, Storage and Offloading (FPSO) units, LNG-FPSO, high efficient, eco-friendly technologies. They will compete for acquiring newbuilding orders from global ship owners.

Published : May 9, 2011