Yangzijiang Shipbuilding aims to defy the market gloom by doubling its sales volume this year.
Chairman Ren Yuanlin says the shipbuilding market is in a bad state due to low demand for newbuildings. However, his company has taken more than 40 orders in the past 10 months.
“Yangzijiang has already secured contracts worth close to $1.5bn, which is the sales target it set for this year,” Ren said. “We will probably exceed our target and achieve $2bn this year.”
Last year, the company had sales of $800m.
Yangzijiang's capability is said to be on a par with state-owned yards such as Dalian Shipbuilding Industry Co and Shanghai Waigaoqiao Shipbuilding (SWS).
The company has an order backlog of 1.71 million cgt as of the end of September and is ranked as the second-busiest shipyard in China by Clarksons research division’s China Intelligence Monthly.
$5bn backlog
It trails China State Shipbuilding Corp (CSSC)-controlled SWS, which has an order backlog of 2.2 million cgt. However, it is ahead of Hudong-Zhonghua Shipbuilding, which has 1.45 million cgt.
Yangzijiang’s order backlog is estimated to be worth almost $5bn.
Most of the ships it has contracted are kamsarmax and capesize bulkers from overseas clients, including Chartworld Shipping, Angelakos (Hellas), Great Wave Navigation and Pan Ocean.
Germany’s Peter Dohle Schiffahrts is understood to have signed up for four 2,700-teu boxships for delivery from the end of next year.
Ren says Yangzijiang has a good reputation for punctual delivery and producing good-quality ships — and that is the main reason it is winning newbuildings contracts.
“Our shipbuilding price is also very competitive and our yard could arrange for refund guarantees within 15 days while other shipyards are struggling to get them,” Ren said. “We also have clients that came back to order more ships, such as Peter Dohle.”
Yangzijiang is scheduled to deliver 45 vessels this year and is planning to produce a similar number or more in 2018.
Re-opening yards
“We reduced our shipbuilding capacity last year and early this year by closing down our ChangBo and Taichang shipyards, but from 2018 we will reopen them,” Ren said. “We want to expand the ship types we are constructing. We are aiming to take orders for clean energy ships such as LPGs, LNG and chemical tankers.”
Yangzijiang is not a newcomer to the LPG market. The company delivered two 27,000-cbm LNG/ethane multigas carriers to Evergas in March. The pair were ordered two years ago at a reported price of $70m each.
“Our focus will still be constructing containerships as it is our speciality and we will also be building bulk carriers in series so as to reduce operating costs," Ren said. "Clean energy ships will be our future.”
Listed on the Singapore Exchange, Yangzijiang has a shipowning outfit based in the Lion City called Yangzijiang Shipping. The company owns 21 bulkers, of which 10 are bareboat chartered out to outfits such as OceanBulk and Tiger Group Investments. The remaining 11 vessels are operated by the company.
Yangzijiang Shipping has sold three vessels this year and Ren says it is planning to sell more “if the offer price is right”.
Ren says the purpose of setting up Yangzijiang Shipping is to help the shipyard secure newbuilding contracts during the market downturn and, at the same time, to take control of newly built vessels that shipowners failed to take delivery of after payments were not made.
Yangzijiang Shipbuilding is putting a hold on offshore business because the oil and gas market is still poor. The yard entered the sector in 2012 after securing an order for a jack-up drilling rig worth $170m from Mena Offshore Investments. It finished constructing the unit two years ago but the owner failed to take delivery despite having paid 10% of the contract price as the first down payment. The rig is now open to charter offers or to buy outright.
