Chinese shipbuilding conglomerates China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC) are pressing ahead with their long-awaited merger plan.
The state-owned shipbuilding companies have officially announced that the two groups are working to consolidate.
Analysts say the combined giant would dwarf even the enlarged South Korean leader being created by the combination of Hyundai Hyeavy Industries and DSME, which is expected to close soon.
"Talks about a merger has been circulating in the market for some time now, and a merger would create an entity that will account for more than half of China’s capacity," said analysts at Arctic Securities.
Details of the merger have yet to be disclosed, but the two groups have said that they will still need approval from the relevant authorities.
The merger of CSSC and CSIC has not come as a surprise to shipbuilding insiders, who have long been expecting this to take place.
“This is just a confirmation of what has been circulating in the market,” said one shipbuilding source.
“We think the merger of CSSC and CSIC may conclude before the year ends. It may even take place before South Korea’s Hyundai Heavy Industries’ (HHI) merger with DSME.”
The combination will create an entity that will account for more than half of China's shipbuilding capacity and dwarf that of its rivals in South Korea.
CSSC, also known as the southern shipbuilding group, controls Hudong Zhonghua Shipbuilding, Jiangnan Shipyard, Shanghai Waigaoqiao Shipbuilding, Shanghai Shipyard, CSSC Offshore & Marine (ex-Guangzhou Shipyard International), Chengxi Shipyard and Guangzhou Wenchong.
Dalian Shipbuilding Industry Co (DSIC), Tianjin Xingang Shipbuilding, Bohai Shipbuilding Heavy Industry, Qingdao Beihai Shipbuilding Industry, Wuchang Shipyard and Shanhaiguan Shipyard all come under the purview of CSIC, or the northern shipbuilding group.
Rumours around the merger of China's two leading shipbuilders last rang around the market in March 2018.
At that time a mega-merger would have forged an industry power with over 10% of the global orderbook and which generated revenue of over $80bn in 2017.
Now, according to Bloomberg, the enlarged entity would boast more than double the revenue of HHI, DSME and Samsung Heavy Industries, the top three shipbuilders globally by market value.
According to Clarksons there were ships worth $63.3bn on order in China at the start of June, a tally that includes 20 VLCCs and 155 bulkers of capesize or larger.
This gave China the most valuable orderbook globally ahead of the $54.1bn being built in South Korea and the $24.5bn under construction in Japan.
China is also dominant in tonnage terms with a 37% share of the orderbook by gross-tons, ahead of the 26% held by South Korea and the 18% by Japan.
Clarksons says Chinese yards received orders for 166 vessels of 4.1 million GT, 52% of the global total.
