China’s shipbuilding capacity utilization index (CCI) fell by 5.8pc in the the second quarter of 2020 (Q2) from the prior year quarter amid reduced new ships orders.  

 

In Q2, China’s CCI posted 568 points, down by 35 points from Q2 2019 and up by 55 points or 10.7pc from Q1.

 

Chinese shipbuilding companies are operating at near-normal level post the COVID-19 pandemic but the number of new ship orders has reduced from Q1 amid negative global sentiments. The global industry is expected to be down in Q3 which, in turn, will subdue new shipbuilding order and put further pressure on China’s CCI.

 

In China, shipping demand has reduced amid a slump in steel and timber trade. Shipping companies are posting losses and have suspended operations or reduced freight rates. Some small and mid-sized shipping companies have shutdown due to financial crisis.

 

In the first half of 2020 (January to June), China’s imported 7.34mn mt steel products, up 26.1pc from the prior year period but export of steel products fell by 16.5pc to 28.7mn mt during the period, according to custom data. 

 

However in June, China’s steel exports dropped by 30.3pc from May to 3.7mn mt. Also, heavy rains in the south caused the steel mills around Yangtze River to suspend operations leading to lower demand for shipping vessels. Heightened competition between shippers, fewer goods to transport and a decrease in freight rate are hampering shipping industry in China.

 

The country reported an 11pc drop in total shipbuilding volume output at 17.6mn dwt. In Q1, China’s output was just 7mn dwt. New orders in H1 rose by 3.4pc from the prior year period to reach 12.5mn dwt. The total order book for Chinese shipbuilding industry fell by 6pc in H1 to 76.54mn dwt as delivery volumes exceeded new orders.  

 

Leave a Reply

Your email address will not be published.