The growth in the Chinese shipbuilding orderbook continues to slow. The prospects of a domestic deal for 30 VLCCs will help, but is it enough to maintain the required backlog?
The Chinese shipbuilders’ orderbook fell by 4.5% between January and August 2020, according to the China Association of the National Shipbuilding Industry (CANSI). During that period, 15M dwt of contracts were placed, of which 13.6M dwt were for export.
During the same period, 24.1M dwt of vessels were finished, which is down 7.1% on the year before, but overtakes the volume of new orders being taken during the same period, eating into the required backlog of 80M dwt.
As at the end of August 2020, the backlog was 72.6M dwt, having shrunk by 8.2% so far in 2020 and is 11.6% lower than in 2019, according to CANSI.
The Chinese Government is said to be offering incentives for domestic owners and operators to order ships, including a 20% discount from state-owned yards. It is not known if this discount is being applied to the up to 30 VLCCs being contemplated by the privately owned Zhejiang Rongsheng petrochemicals producer, but this order would go some way towards maintaining the backog.
Shipping consultants BRL report that Zhejiang Rongsheng is being offered non-dual-fuel VLCCs at between US$83M-US$85M, a very keen price. Bids are expected from CSSC-owned builders Shanghai Waigaoqiao, Guangzhou Shipyard International and Dalian Shipbuilding Industry. The orders are expected to be in units of two to 10 vessels, with a total of 30 VLCCs required to service a new Zhejiang Rongsheng petrochemical plant.
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