Chinese yards resume sales drive

It seems that following in the footsteps of their South Korean counterparts, Chinese shipyards have resumed marketing activities for newbuildings. Major yards in South Korea had, this spring, reactivated sales drives for newbuildings offering delivery slots made vacant as the result of their accepting owners’ requests to postpone deliveries of containership newbuildings.

They seem to focus on winning orders mainly for VLCCs and Capesize bulkers. In light of the South Korean yards’ resumption of marketing activities, how Chinese yards would react had been attracting keen attention of the industry and, now, they appear to be following suit.

Various comments are being heard from shipbuilding sources such as “The Chinese are offering a price of less than $60 million for an Aframax bulker.” “We have heard a $40 million offer was made for an MR-type product carrier newbuilding.” “They seem to have begun selling Suezmaxes.”

Deliveries they offer seem to be centred on 2011. Amid the stalled newbuilding market, some of the Chinese yards are set to continue with their marketing activities to secure orders, mostly from domestic owners. According to information from overseas, Nanjing Jinling Shipyard, a subsidiary of the Changjiang National Shipping Group Corp. seems to have bagged an order for eight 92,500-dwt post-Panamax bulkers from a logistics service group Centrans Group Holdings Co. at a cost of $50 million each. Delivery is set for 2011 and beyond.

Behind the re-opening of sales talks by Chinese and South Korean yards lie the massive price falls of shipbuilding steel products. In South Korea, the price of imported steel from Japan has now plunged to less than $700 per ton, nearly half of the price recorded in February. In China as well, steel prices are now down to 3,000-4,000 yuan per ton, half the peak level of last year.

It seems that even in Japan, some shipyards are beginning to present quotations on newbuildings. However, most of the yards, unable to forecast the cost trends in the future, may take some more time before they set sail in the newbuilding market again. While Japanese shipbuilding sources express anxiety over a possible unavoidable negative impact on domestic yards if Chinese and South Korean engage in a reckless price competition in quest of orders, they do not expect them to be able to land orders so easily, saying that for now, they have no action to take but to watch the market trend closely.