A surge in demand for new LNG carriers and renewal of the container ship and car carrier fleet — coupled with rising newbuilding prices — has breathed fresh life into some collapsed shipyards in the Far East, especially in China.
Maritime Strategies International noted that 12 mothballed shipyards in the Asia-Pacific region have announced their reactivation since 2021, of which eight are in China.
These eight yards have a combined capacity of 67.m gt, based on historical maximum output, which is equivalent to 27% of the total active Chinese shipyard capacity at the end of 2021.
The figures have made some industry watchers wonder whether the shipbuilding sector will face excess capacity once again when demand for new ships cools down.
“Although these headline figures may give pause to some concerned about another ‘boom-and-bust’ cycle in shipyard capacity, MSI firmly believes that the actual growth in shipyard capacity will fall short of these numbers,” the shipping consultancy and research company said.
It added that some capacity will be used for ship repairs, hull block construction or other activities.
MSI believes Chinese shipyard capacity will only increase in the short to medium term.
“Unlike the ‘boom-and-bust’ cycle of the last 20 years, this expected increase will be more moderate,” MSI said.
“Based on our current modelling, which incorporates information on shipyard reactivations, we believe that Chinese shipyard capacity will increase from a nadir of 24.7m gt in 2021 to 27.2m gt in 2025.”
MSI added that the complete reactivation of some yards will take several years and involve considerable costs and time to ramp up production volumes. It also believes some of the yards involved will not reactivate all their historical capacity.
“While we have already started to see capacity increase, gains to date have been modest,” MSI said. “Based on our latest modelling, we anticipate global capacity will rise to 68.8m gt by 2025, up 4% in 2021. Increases in Chinese shipyard capacity will account for most of this increase.”
MSI forecasts that global shipyard capacity will be further boosted in the second half of the decade, driven by the anticipated extended rise in contracting for new tonnage from 2026 onwards in response to replacement demand and environmental regulations. The shipbuilding capacity should peak at around 80m gt in 2030.