Who is winning the shipbuilding battle this year?

26 Sep 2018, Global – Asia is the largest shipbuilder in the world and contracted to build two-thirds of the US$218 billion global newbuild ships on order, led by China, South Korea and Japan. However, South Korean shipbuilders are catching up and have overtaken the Chinese to secure more newbuild vessel contracts year-to-date.

Asia will construct two-thirds of all the new ships in the world

Asia is the largest shipbuilder in the world and is contracted to build two-thirds of the US$218 billion global newbuild ships on order.

Chart: Global shipbuilders orderbook value by region (2018)

Global shipbuilders orderbook value by region (2018) 

Top 5 shipbuilding nations in the world are China, South Korea, Japan, Italy and Germany

Based on the current newbuild vessel orderbook, Chinese shipbuilders leads with US$59 billion of orders, closely followed by South Korea at US$53B and Japan at US$24B. Italy and Germany rank the 4thand 5th largest shipbuilding nations in the world with US$18B and US$16B orders in place respectively.

Chart: Top 5 shipbuilding nations in the world by contract value (US$B)

Top 5 shipbuilding nations in the world by contract value (US$B)

However, South Korea is catching up and has overtaken China in securing more newbuild vessel contracts year-to-date

The global shipbuilding industry has secured 623 newbuild vessel orders so far this year, amounting to US$40 billion in contract value. This is 7% lower compared to a year ago. See our previous report for more details:

US$40 Billion Newbuild Vessel Orders Placed This Year

Although the Chinese shipyards have won more shipbuilding contracts (268 vessels) than the South Korean shipbuilders (172 vessels) year-to-date, they lag in terms of contract value. South Korean shipbuilders have secured contracts amounting to US$16 billion year-to-date, 53% higher than a year ago.

In comparison, the Chinese yards secured US$11B of contracts year-to-date, 9% higher y/y. In contrast, the value of the Japanese shipbuilders’ secured contracts have fallen by 4% y/y to US$3B year-to-date this year.

Chart: Shipbuilding contracts secured (2018 year-to-date)

Shipbuilding contracts secured (2018 year-to-date)

LNG Carriers, VLCCs and Suezmax tankers are segments where South Korea has a significant contracting lead over China and Japan

South Korean shipyards have US$18 billion worth of LNG carriers on order versus only US$4B for Japanese yards and US$2B for Chinese yards.

South Korean shipbuilders also have significantly more VLCC and Suezmax newbuild tanker orders compared to the Chinese and Japanese yards.

China still leads in building dry bulk vessels and smaller containerships

China’s market share lead in the global shipbuilding sector is mainly in the dry bulk vessels segment where it has US$14 billion worth of newbuild orders and in the smaller newbuild containerships segment where China has a 62% global market share.

 

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Independent Research Declaration: Crucial Perspective does not own any position in the equities featured in this report nor have we received any compensation for writing this report. 

 

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