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Since the beginning of this year, new ship demand has rebounded significantly. From January to July, the world signed a total of 1,014 new ship orders and 78.94 million dwt, an increase of 183.7% year-on-year based on dwt, the highest since 2016. In July, 116 new ship orders were signed worldwide and 8.36 million dwt, a decrease of 30.9% month-on-month and an increase of 258.5% year-on-year based on dwt.
Brief comment
Since the beginning of this year, new ship demand has rebounded significantly. 1-July, the world signed a total of 1,014 new ship orders and 78.94 million dwt, an increase of 183.7% year-on-year based on dwt, the highest since 2016. In July, 116 new ship orders were signed worldwide and 8.36 million dwt, a decrease of 30.9% month-on-month and an increase of 258.5% year-on-year based on dwt. In the short term, the international shipbuilding market will continue to be active, and the annual new ship transaction volume is expected to reach 120 million dwt, higher than the industry's generally expected 90 million dwt at the beginning of the year.
China, according to data from the China Shipbuilding Industry Association, from January to July, 24.18 million deadweight tons of shipbuilding were completed nationwide, an increase of 20.7% year-on-year. It received 45.22 million dwt of new ship orders, an increase of 223.2% year-on-year. At the end of July, handheld ship orders were 89.67 million dwt, an increase of 18.6% year-on-year, an increase of 26.1% from handheld orders at the end of 2020.
We judge that the new shipbuilding market will continue to be active this year and may become a small peak in the shipbuilding market in recent years. This year's shipbuilding market activity is mainly driven by the following reasons: First, the downstream shipowners have sufficient cash flow, the current price of new ships is still low, and the shipowners' willingness to build ships has increased. Affected by the mismatch between supply and demand caused by the epidemic, since the end of 2020, the freight rates of container and bulk carriers have risen sharply, and the Clarkson Marine Transportation Index in July 2021 increased by 107% compared with the beginning of the year. The sharp and rapid increase in freight prices has led to a significant increase in shipowners' profits and sufficient working capital in the first quarter. However, shipbuilding prices further declined in 2020, and shipowners' willingness to build ships in the current environment has increased. Second, due to the impact of the epidemic in 2020, new shipbuilding orders have dropped significantly, and shipowners’ orders have been postponed to 2021. Combined with the improvement of subsequent update plans, orders in 2021 will become a small peak in the shipbuilding market in recent years. Global new shipbuilding orders in 2020 are only 60 million dwt, and this part of the demand will be postponed to 2021. The growth rate will be based on the delivery date. The current delivery date of container ships is ranked between 2023 and 2024, indicating that some subsequent replacement plans may have been released in advance.
The small peak of this shipbuilding has limited flexibility in impact on ship prices. Judging from the shipowner's willingness to build, the relative shortage of capacity caused by this epidemic is mainly caused by the decline in port loading and unloading efficiency, not the shortage of ship capacity. In addition, due to the impact of overcapacity after the shipbuilding peak in 2008, and the technical route is not yet mature after the environmental protection requirements are improved, ship owners are currently relatively cautious in building new ships and have high demand elasticity, so the price increase is limited. Currently, Clarkson's new shipbuilding index is 143, an increase of 13.5% from the end of 2020.
new shipbuilding market has entered a long-term upward phase, and the epidemic has accelerated the arrival of an upward cycle. shipbuilding market demand comes from two aspects: one is the growth in fleet size demand brought about by the growth of maritime freight volume. The second is to update the requirements. Before 2017, the deepening of globalization made the growth of sea freight volume faster than global GDP. After 2018, trade protectionism rose, and the growth rate of sea freight volume slowed down. The impact of the epidemic in 2020 may show negative growth. In 2021, due to the emergence of consumption stimulus effects in European and American countries, sea freight volume may return to positive growth. In terms of update demand, starting from 2023, the period of continuous upward demand will gradually enter a period of continuous upward trend, which may reach 10 years. The impact of this round of epidemic will accelerate the arrival of the upward cycle.
pay attention to long-term investment opportunities in the ship manufacturing industry chain. The current ship price is at a low level, and coupled with the rising price of air steel, it squeezes the profits of ship companies. However, from a long-term perspective, the continued upward trend of orders in the next 10 years is determined. Compared with the shipbuilding situation during the financial cycle in 2008, the growth rhythm of this upward cycle is more stable. It is recommended to pay attention to long-term investment opportunities. suggests to pay attention to the targets, China Shipbuilding and China Heavy Industry.
Risk warning: 1. The trend of trade protectionism has increased, and the global maritime volume growth momentum is insufficient; 2. South Korea and Japan have expanded ship manufacturing capacity to squeeze the share of Chinese shipyards; 3. Steel prices operate at a high level, compressing the profits of ship companies.
Content listed in this article does not constitute investment advice
There is risk in entering the market. Investment should be cautious.
Content source reference: CICC Securities Research
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