While China and South Korea fiercely compete in the LNG carrier and other high-end ship markets, Japanese shipbuilders have seen a surge in bulk carrier orders this year in the three major traditional ship types. As the price gap between Chinese and Japanese shipbuilders is rapidly narrowing, Chinese shipbuilders are losing their leading advantage.
Chinese ship companies raise prices, China-Japan LNGThe price difference of Capesize bulk carriers with good performance has narrowed significantly
According to Japanese media reports, taking LNG-powered Cape-size bulk carriers as an example, Chinese shipbuilding companies currently quote about $85-90 million per ship, while Japanese shipbuilding companies quote slightly above $90 million, reducing the gap between the two sides to about $5 million. Until last year, Chinese companies' quotes for this type of ship were as low as about $70 million, while Japan's was $90 million, with the price gap reaching as high as $20 million.
Thanks to price advantages, Chinese shipbuilding companies have been able to win almost all of the LNG-powered Capesize bulk carrier orders since last year. According to Clarkson data, a total of 39 LNG-powered Capesize bulk carriers were ordered since last year, of which 36 were received by Chinese shipbuilding companies, including 23 by New Era Shipbuilding, 10 by Waigaoqiao Shipbuilding, and 3 by China Shipbuilding Heavy Industry. Most of these orders come from overseas shipowners and are used to serve long-term charters for the price differential of BHP and Anglo American.
In contrast, only three orders were given to Japanese shipbuilders, namely the three 210,000 deadweight ton LNG-powered bulk carriers jointly ordered in July this year by Japan's second-largest steel group JFE Steel and three of Japan's major shipping companies. These three new ships will be developed and designed by the joint venture 'Nihon Shipyard' of Japan's two major shipbuilders, Imabari Shipbuilding and Japan Marine United (JMU), and are scheduled to be constructed at JMU and Imabari Shipbuilding in the future.
Regarding this, Japanese industry insiders commented that Chinese shipbuilding companies may have taken on some low-priced orders last year. This year, the rise in steel prices along with increased labor costs has made it even more difficult for Chinese shipbuilding companies to make a profit, leading them to raise their prices accordingly. 'Currently, Chinese shipbuilding companies are offering more reasonable prices.'
China is gradually losing its low-cost advantage, and Japanese shipping companies' orders have increased, the vast majority of which are bulk carriers.
Against the backdrop of a continued recovery in the global new shipbuilding market, Japanese shipbuilding companies have seen a significant increase in orders this year. In the first half of the fiscal year (April-September), overall orders have already approached the total level of the entire 2020 fiscal year.
According to data released by the Japan Ship Exporters' Association (JSEA), in the first nine months of this year, Japanese shipbuilders received orders for 248 vessels totaling 12.21174 million GT, a year-on-year increase of 150.8%. The ship types include 56 general cargo ships, 168 bulk carriers, 23 oil tankers, and 1 ferry.
Japanese media reported that freighters and container ships have firm shipping rates, and these two types of ships account for the largest proportion of orders undertaken by Japanese shipping companies. Among them, small and medium-sized bulk carriers have always been one of the main ship types for Japanese shipping companies. It is understood that major Japanese shipping companies have signed a large number of contracts for the construction of small and medium-sized bulk carriers this year, which are the main products of the Japanese shipbuilding industry. While Chinese and South Korean shipping companies frequently take orders for large container ships, Japanese shipping companies have taken the opportunity to target the small and medium-sized bulk carrier market, seizing the opportunity of rising ship prices to accumulate orders. Currently, many shipping companies have almost sold out all delivery schedules for 2024.
As Chinese shipbuilding companies have been raising ship prices since the beginning of the year, some shipowners have turned to Japan to order more environmentally friendly ships. Major Japanese shipyards have gradually received orders for bulk carriers, including Panamax, Supramax, and Handymax types. Some of these orders come from European shipowners, featuring new designs that comply with greenhouse gas (GHG) regulations and the Stage 3 EEDI requirements. According to people in the Japanese shipbuilding industry, some European shipowners highly appreciate the construction quality of Japanese shipyards and are willing to pay higher prices than those offered by Chinese shipyards for similar ships.
As China gradually loses its low-cost advantage, the Japanese side believes that ships built by Japanese shipyards have excellent fuel efficiency. Considering the current price differences, it is completely reasonable for shipowners to order ships in Japan. The only factor to be observed is the difference in ship types.
It is understood that Japanese shipping companies' main ship type in the Capesize bulk carrier field is the 210,000 DWT wide-body, shallow-draft vessel, which can adapt to the relatively shallow waters of the Seto Inland Sea where Japanese steel mills are located, as well as the tidal fluctuations of ore loading ports in Western Australia, maximizing loading capacity. This makes it an ideal choice for trade routes between Australia and Japan. The three LNG-powered bulk carriers ordered by JFE Steel this year also adopt this wide-body, shallow-draft design.
On the other hand, in addition to the 210,000 deadweight tonnage, Chinese shipbuilders are also able to provide 180,000 deadweight tonnage Dunkirkmax ships. This type of vessel has good versatility and can be used for a wide range of raw material trade routes, including Brazil-China. Therefore, the Japanese industry has pointed out that amid narrowing price differences, shipowners' demand for different types of vessels may become a key factor affecting the future competitiveness of Chinese and Japanese shipbuilders in securing orders.
