China hopes to reclaim the top rank in the shipbuilding sector as Shanghai, the major global shipbuilding production center, restarts its operations.
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The three Shanghai-based shipbuilding conglomerates, Jiangnan Shipyard, Hudong-Zhonghua Shipbuilding (Group) Co, and Shanghai Waigaoqiao Shipbuilding Co, have resumed their operations.
The covid outbreak in Shanghai hampered the shipbuilding industry due to logistical challenges, quarantine restrictions, and other issues. Furthermore, in the first quarter of 2021, South Korea surpassed China as the world’s top shipbuilder regarding new orders.
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However, according to industry analysts cited by Global Times, Shanghai’s shipbuilders, which are now operating at 70% of typical capacity, will catch up in the year’s second half. Between January and May this year, Global new ship orders totaled 16.25 million compensated gross tonnes (CGT).
CGT is a benchmark used to compare the relative production of merchant shipbuilding activity across different countries and enterprises.
Clarksons Research noted, “China had 247 ships and 7.16 million CGT, with a global market share of 44.1%, a year-on-year decrease of 3.2 percentage points. Beijing ranks second to South Korea’s 45.2 percent in market share.”
China, South Korea, and Japan are the world’s largest shipbuilders, with South Korea and China accounting for the lion’s share of the market. Going by this year’s data, South Korea’s worldwide market share eclipsed China’s for the first time since 2018.
South Korea houses four of the eight major shipbuilding businesses: Ulsan-based Hyundai Heavy Industries; Seoul-based Daewoo Shipbuilding & Marine Engineering (DSME); Geoje-based Samsung Heavy Industries; and Jinhae-based STX Offshore and Shipbuilding.
Last year, Beijing and Seoul held 36% and 47% of the market in the same period, respectively. The Global Times claimed that South Korea’s contracts for high-value-added LNG carriers and production restrictions by several Chinese shipbuilders in the wake of Shanghai’s pandemic limitations pushed it to achieve the top spot.
The Chinese media outlet predicted that Chinese shipbuilders would reclaim the top rank in the future, primarily because Shanghai is already operational, and global demand for containerships and LNG carriers is also expanding due to the global economic recovery.
“Shanghai’s shipbuilders are back to more than 70 percent capacity utilization,” Wu Minghua, an independent shipping industry analyst from Shanghai, told the Global Times on Monday, highlighting a well-developed supply network, a mature manufacturing line, and self-developed core technology.
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The noticeable disparity in shipbuilding orders between the two biggest producers – China and South Korea occurred in May when Shanghai was only starting to restore production and output while fighting the covid-19 outbreak, the Global Times said.
According to Clarksons Research, “Global new shipbuilding orders added up to 2.5 million CGT (57 ships) in May and 48%, 34% and 17% of the orders went to South Korean, Chinese and Japanese shipbuilders, respectively.”
Chinese experts, however, remarked that Chinese shipbuilders had made tremendous progress in recent months, despite dealing with supply chain snags and rising raw material prices, as well as combatting the pandemic.
In terms of cumulative new ship orders from January to April, South Korea narrowly edged out China by 0.1%, demonstrating the Chinese shipbuilding industry’s resilience, added to the report.
The Chinese media outlet also emphasized the significance of the Chinese shipbuilding sector, stating that the world’s largest containerships, capable of carrying 24,000 standard containers, have completed trial runs and would be launched in mid-June.
After production began, Hudong-Zhonghua Shipbuilding (Group) Co. delivered three ships and won 23 big LNG ship-related contracts worth more than 30 billion yuan from January to May.
“Shanghai shipyards operated under closed-loop management during the epidemic, and they stockpiled necessary materials in advance, which enabled them to ensure smooth production and delivery in hard times,” Wu said.
According to Chen Daxi of the Chinese Society of Naval Architects and Marine Engineers in East China’s Zhejiang Province, who spoke to the Global Times on Sunday, “China’s shipbuilding industry remains the world’s No.1 in production capacity and orders, with the Yangtze River Delta, with Shanghai as the center, taking around 70 percent of the country’s total.”
Nevertheless, worldwide demand for new ships will expand as the global economic recovery accelerates, providing a big market for China and South Korea.
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