China’s shipyards are expected to “catch up” much of the newbuilding output lost in the second quarter of 2022 due to the country’s zero-Covid strategy, according to Clarksons.
Since March, disruption due to Covid-19 restrictions, notably the Shanghai lockdown, has contributed to lower volumes from Chinese yards.
In April, newbuilding deliveries were just 800,000 cgt, down 24% year-on-year with zero deliveries from yards in Shanghai.
Wider disruption
“The three major Shanghai builders, which accounted for a combined 17% of Chinese deliveries in 2021, halted production in late March, with activity resuming steadily across April-July,” said Clarksons.
Elsewhere in China, many shipbuilders are said to have been impacted by wider disruption, for example in the manufacturing and transportation of equipment or materials.
However, with production at lockdown-impacted yards generally picking up again and June deliveries down just 8% year-on-year some “catching up” of deliveries in the second half of this year is expected.
Deliveries from Chinese shipyards remained relatively steady across the 2016 to 2020 period, averaging 11.6m cgt per year, according to Clarksons.
In 2020, they managed to deliver 11.1m cgt, down only 5% from 2019, despite disruption from the initial Covid-19 outbreak in the first quarter, which saw output from February to March 2020 fall 46% year-on-year.
In 2021, improving shipping market sentiment supported an increase in output to 13.7m cgt, the highest volume since 2013.
In early July 2022, it emerged that China’s largest privately owned shipbuilder Yangzijiang Shipbuilding had been able to maintain its newbuilding delivery schedule.
Singapore-listed Yangzijiang handed over a total of 18 vessels in the second quarter of 2022, according to Singapore investment house UOB Kay Hian.
Another contributing factor to China’s lower newbuilding deliveries this year can be traced to weak order volumes in 2020, according to Clarksons.
At the start of 2022, the volume of tonnage on Chinese yards’ orderbooks due for delivery in the coming 12 months stood at 32m cgt, down 13% compared with the start of 2021.
Well positioned
However, following firm ordering last year, this trend of weaker deliveries seems likely to be short-lived, the shipbroker said.
Clarksons expects total deliveries from Chinese shipyards in 2022 to reach a projected 11.9m cgt, down 13% year-on-year but up from the start of the year projections.
“Despite some impact on output in the first half of 2022, provided further disruption can be avoided, Chinese shipyards look well positioned to increase delivery volumes again, with output projected to rise in 2023 to 14.2m cgt,” the broker said.
“Further ahead, yards will be hopeful that firm fleet replacement driven by the fuelling transition provides further momentum to deliveries as the decade progresses.”
