Subdued Commodity Prices and Declining Freight Rates to Put a Constraint on China Shipbuilding Industry: Ken Research

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Subdued Commodity Prices and Declining Freight
Rates to Put a Constraint on China Shipbuilding
Industry Ken Research
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Prices for all the major commodities, for
instance, coal iron ore and crude oil are
expected to remain depressed for the next few
years. This undoubtedly translates into depressed
shipping rates, especially for dry bulk carriers
at the time when two-third of the Chinese
shipbuilding industry is involved in the
production of bulk carriers.
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• China News
• With most of the developing world suffering from
  an economic slowdown, a prolonged weakness in the
  commodity prices is expected over the next
  decade. Fluctuations in the commodity prices have
  a huge effect on the Shipbuilding Industry. The
  expectation of low commodity prices means that
  there will be a readjusting of the current and
  future fleet of the shipping companies. This
  directly affects the orders for the new ships
  that the shipping companies place with the
  shipbuilders. In 2015, Chinas Shipbuilding
  Industry accounted for 35 of the global
  shipbuilding industrys revenue. Chinas
  Shipbuilding Industry value has been declining
  since 2010. The new orders in China Shipbuilding
  Industry witnessed a negative CAGR of 7 from
  2010-2015. This has been in line with the
  declining orders in the global shipbuilding
  industry. This is mainly attributable to the fact
  there is no longer any kind of elevation is
  expected in the prices of the commodities.
  After years of heavy investment in the commodity
  extraction, the majority of commodity producers
  are concentrating their attention on keeping
  their market share, especially in case of coal,
  iron ore and crude oil. This has created
  oversupply situation and has been the reason for
  the declining commodity prices.

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Its a rampant trend that when freight rates are
not sufficient to cover the running costs, the
vessels are laid up. China has been the most
popular country for the laid-up vessels. The
increasing trend is driven by the lower than
estimated world economys growth and by
persistent tonnage oversupply as evident from the
dry bulk sector. Lay ups have been more for the
larger vessels as the daily running expenses are
considerably above the earnings with no signs of
improvement in the world economy. This is one of
the major causes for the decline of the
industry. Even the future does not seem to go
well for the Chinese Shipbuilding Industry. A
series of consolidation is on the cards for most
of the Chinese shipyards. Revenues for the
Chinese Shipbuilding Industry are expected to
decline in the future. Even the steel industry,
one of the major industries for the shipbuilding
sectors, shows little signs of recovery and is
exacerbating the problems for the shipbuilding
sector.
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The report titled China Shipbuilding Industry
Outlook to 2020 - Concentration on Gas Carriers
and Cruise Ships to Stimulate China Shipbuilding
Industry provides detailed overview on the new
shipbuilding and ship-repair industry of China.
This report helps reader to identify the ongoing
trends in the industry and anticipated growth in
future depending upon changing industry dynamics
in coming years. The report is useful for
shipbuilding companies, shipping companies and
the companies providing maritime services to the
clients and other stakeholders to align their
market centric strategies according to ongoing
and expected trends in the future. For more
information on the report, refer to the below
link https//www.kenresearch.com/manufacturing-a
nd-construction/infrastructure/china-shipbuilding-
market-statistics/42910-97.html Contact UsKen
ResearchAnkur Gupta, Head Marketing
CommunicationsAnkur_at_kenresearch.com91-901537824
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