Shipping demand drives shipbuilding, car carriers are scheduled to be delivered until 2027

Whether the shipping market is hot or not, the shipbuilding industry is a weather vane.

Recently, the China Shipbuilding Industry Association released the China Shipbuilding Capacity Utilization Monitoring Index (CCI) for the second quarter of 2023, reaching 798 points. This is the first time the index has approached 800 points in 10 years, with a year-on-year increase of 14% and a month-on-month increase of 3.4%.

Affected by transportation demand, the oil tanker segment and dry bulk carrier segment performed well in the new shipbuilding market. According to data from Clarksons, a shipping research institute, orders for oil tankers in the first half of 2023 will increase by 312% year-on-year, accounting for about 30% of new orders received. A report by China Securities Construction Investment also shows that in the first half of 2023, 38.9% of my country's new orders are bulk carriers, 30.4% are oil tankers, container ships account for 16.7%, and 5.6% are gas carriers.

Many new shipbuilding orders are undertaken by Chinese shipyards. According to data from the China Shipbuilding Industry Association, the number of new orders received by China's ships in the second quarter increased by 48.2% from the previous quarter, and the number of orders in hand increased by 8.2% from the previous quarter. In addition, according to the data of the China Shipbuilding Industry Association, from January to June 2023, my country's shipbuilding completions, new orders and orders in hand accounted for 49.6%, 72.6% and 53.2% of the world's total in deadweight tons, respectively. The total tonnage accounted for 47.3%, 67.2% and 46.8% respectively, ranking first in the world.

For example, in the tanker sector, Kurow Shipping ordered 4+4 Aframax tankers in Zhoushan Changhong, which are scheduled to be delivered in the fourth quarter of 2025 and the first half of 2026. In the dry bulk segment, Agricore Ship Management placed an order for two 84,000 dwt Kamsarmax ships at CSSC Chengxi Shipyard, a subsidiary of China State Shipbuilding Corporation, at a unit price of US$35.5 million, and is scheduled to be delivered in June and December 2026. The situation of the car ship sector is also good. Hoegh Autoliners, a Norwegian shipping company, placed an order with China Merchants Heavy Industry for four 9100CEU car ships, which will be delivered in 2026.

According to Clarkson's new ship price index, it continued to rise by 6 points in the second quarter. At the same time, the "New Shipbuilding Market Summary and Prospect" released by Clarkson in mid-July shows that since 2023, shipyards have quickly sold the remaining delivery spaces for 2025, and the price of new ships continues to rise. As of the end of June, the newbuilding price index was 171, up 5% from the beginning of 2023 and 34% from the beginning of 2021, reaching the highest level since January 2009.

In terms of specific ship types, the demand for container ship orders in the first half of the year fell from the high level of last year, and its newbuilding price index rose slightly by 3% compared with the beginning of the year; oil tanker orders surged, and the newbuilding price index of oil tankers rose by 6%; the newbuilding price index of bulk carriers resumed. Back up 5%.

Both the change in the number of new ship orders and the adjustment of the new ship price index are directly affected by the prosperity of the shipping market. Taking car carriers as an example, according to data from Clarksons, as of early July 2023, the newbuilding price of LNG fuel-powered car carriers with 7,000 standard parking spaces has reached 97 million US dollars. This is closely related to the continued restoration of the global automobile shipping trade. Clarkson predicts that the volume of automobile seaborne trade in 2023 will increase by 7.6% year-on-year to 21.65 million vehicles, surpassing the total volume of 21.1 million vehicles in 2019 again. Among them, the growth of China's automobile export trade Contributed about 37% of the repair increment.

The increase in the export volume of new energy vehicles is the core reason for the growth of China's auto export trade. According to Canalys, a world-renowned independent analysis organization, China's total auto exports are expected to reach 4.4 million in 2023, of which new energy vehicles are expected to account for more than 30%. Canalys believes that 2023 will be the first year of rapid growth of light-duty new energy vehicles worldwide.

It is precisely because of the rapid growth of new energy vehicle exports in the past period and the expectations for this market that the capacity gap of car carriers has emerged.

The Clarkson research report shows that the current total size of the car carrier fleet is 4.01 million standard parking spaces, a slight decrease from the level in 2019. The current global order for car carriers is 147 ships, totaling about 1.12 million standard parking spaces. In terms of the number of parking spaces, orders in hand accounted for 28% of the fleet. However, due to the current sufficient orders from various shipyards, coupled with the shortage of workers and difficulties in the supply chain, the delivery date of the car carrier has been scheduled until 2027.

Regarding the situation of "one ship is hard to find" in the car carrier market, Zhou Xuhui, deputy general manager of Guangzhou Shipbuilding International Co., Ltd., analyzed in an interview with China Securities Journal that the momentum of Chinese car companies' products going overseas is unabated, and the order price of car carriers is on average. The increase is higher than that of container ships, oil tankers and bulk carriers. The shortage of shipping capacity and rising prices have made many shipping companies see business opportunities.