Shipbuilding cancellations hit plate market

Shipbuilding cancellations hit plate market

According to a recent report from World Steel Dynamics, perhaps 300 contracts to build capsize and Panamax vessels may be cancelled and some new shipyards may close. World Steel Dynamics estimates that approximately 15,000 tonnes of steel plate is needed to build each vessel, which would mean a potential reduction in plate consumption of 4.5 million tonnes. It added that “The turn for the worse in this market is one of the reasons why steel plate prices have come under pressure in the past two months.”

It indicated that the current fleet of Capesize vessels numbers about 826, with 760 ordered for delivery by 2012 including 118 large sized Capesize vessels that will crowd out about 160 smaller ones. WSD maintains that 39% of the 760 orders are likely to be cancelled. Other industry observers contend the impact on steel from shipbuilding may be closer to 20,000 tonnes per vessel, which translates to a plate consumption loss of 6 million tonnes worldwide from projected Capesize and Panamax newbuildings.

Still, global steel plate consumption from all end markets is estimated by several sources at about 150 million tonnes in 2008. Of that, about 100 million tonnes is considered heavy plate with about 60 million tonnes per year going to shipbuilding in

the recent boom years. A potential 6 million tonnes loss from cancelled capsize and Panamax orders would represent a 4% fallout in terms of all steel plate usage in a given year, or a roughly 10% decline for just shipbuilding steel. While it also does not account for any possible cancellations for containerships, tankers, cruise ships and other new builds on the order books, much of the orders are for ships in 2010 and 2011, so the impact on steel suppliers would not be immediate.