Recently, container ships as the representative of the main ship type to achieve batch orders, showing the strong recovery momentum of the shipbuilding industry. Benefiting from the industry recovery, domestic shipbuilding listed companies are also expected to usher in improved performance.



Container ships meet the tide



China State Shipbuilding Corporation (CSSC) announced on April 2 that its two largest shipyards, Dalian Shipbuilding Heavy Industry Group (DSIC) and Guangzhou Shipbuilding International (GSIC), have placed orders for 13 16000TEU container ships with a total value of more than 10 billion yuan, the largest single order for a Chinese shipbuilder. Among them, Shipbuilding Heavy Industry to undertake 7, Shipbuilding International to undertake 6.



Shares of listed companies in the shipbuilding sector rose on April 6 on the news. Among them, China Heavy Industry Co., a wholly-owned shareholder of Ofunge, closed up 2.95%. China State Shipboard, which is the controlling shareholder of GCSG, closed up 5.19 per cent.



According to industry introduction, the situation of container ship bulk order has been continuing for some time, especially in the first quarter of this year, the global container ship market ushered in a wave of orders. According to the statistics of the Economic Research Center of China Shipbuilding Group, in the first quarter of 2021, the global total volume of container ships was 151, a total of 16.59 million DWT, measured by TEU, is 1.6 times of the annual volume of 2020, and set a historical record in the same period; In terms of deadweight tons, it has accounted for 52% of the current global volume of new ship transactions, becoming the main force of the shipbuilding market recovery this year. Major Chinese shipyards, such as Yangzijiang, have also announced container ship orders.



Economic research center of China shipping group, the officials said the global container shipping market significantly improved, the shipping company earnings, owner credit conditions continue to improve, the investment confidence restored, the international market order quick release, previously affected by the epidemic on container ship new order plan, especially the book and make plans to restart ultra large container ships, Drive the global container ship shipbuilding market ushered in a new round of order tide.



It is understood that since the fourth quarter of last year, the macro-economic situation is expected to be good, the export trade has a full force, the container demand quickly from the bottom to supply, the consolidated trade recovery significantly. The recent unexpected grounding of shipping containers in the Suez Canal has further strained the situation.



The strong recovery of container demand has rapidly boosted the price of container shipping. According to the data of Drewry Shipping Consulting Company, the container freight rate index has risen rapidly since July 2020 and is now at a relatively high level. The rise in freight rates has led to a rise in container ship rents. Since the third quarter of 2020, the performance of head liner companies has improved greatly.



CCOSC's net profit in 2020 increased 46.76% year on year; On the evening of April 6, the company disclosed the performance forecast, showing that the first quarter forecast profit of 15.45 billion yuan; That compares with a net profit of only about 292 million yuan a year earlier. The company said that during the reporting period, the company continued to increase capacity, guarantee container supply, lift services and other measures to ensure global transportation services, to achieve volume and price increases, the overall performance compared with the same period last year to achieve a substantial growth.



In addition, the global container leader CIMC in 2020 net profit also rose significantly 246.88% year on year. The industry believes that "container prices will remain high in the first half of this year due to record container demand and the Suez Canal accident".



According to industry estimates, the global container shipping volume will increase by more than 5% in 2021, and the demand for consolidated shipping is expected to usher in a comprehensive recovery, while the global container ship fleet capacity growth rate is about 3.4%, and the market supply and demand will maintain a tight balance.



China ship group economic research center related people also said that the prospect of the branch box ship market can be expected, large and super large box ships still have bulk orders, in addition, part of the medium box ship update demand is also expected to release. However, there may be speculative orders.



Companies welcome opportunities for improved performance



Industry of the securities times reporter is introduced, in addition to the container ship, since the first quarter of 2021, the international shipbuilding market is relatively strong recovery, the macro economic situation is expected to improve, owner credit conditions continue to improve, the urgent demand of capacity to update multiple positive effects, the owner's investment confidence continues to strengthen, demand for new ships large capacity growth, Rapid release of market orders.



China Shipbuilding Group Economic Research Center statistics show that in the first quarter, the global total volume of new ship orders 31.8 million DWT, a year-on-year surge of 157%; In March, global orders for new ships topped 18m dead weight tonnes, the highest monthly level in the past five years and the highest level for the same period since the 2008 financial crisis.



Orders increased to bring about an improvement in the market supply and demand, the price of new ships stopped falling and rose. As of early April, Clarkson's new ship price index rose to 131.0 points, up 5.4 points from the start of the year and a five-year high. In terms of the prices of typical ships, the prices of VLCC, 180,000 ton Capesize bulk carriers and 15000TEU container ships rose by 6.4%, 11.8% and 12.3% respectively.



The Clarkson Marine Index is now above $20,000 a day, a level not seen since the financial crisis of 2008. BDI, CCFI and other main ship type shipping industry barometers are also at a recent high level.



China Shipbuilding Group Economic Research Center related people believe that a variety of factors superposition to boost the market to usher in a downturn after several years of positive growth, one is the positive growth trend of the world economy and trade, according to the International Monetary Fund (IMF) estimated that in 2021, the global economic growth is expected to rebound to 5.5%, reaching the highest level in nearly a decade. Second, the growth foundation of the shipping market is becoming more and more solid. From the demand side, the global seagoing trade volume is expected to rebound to 4.2% in 2021, surpassing the pre-epidemic level. From the supply side, by the end of 2020, the ratio of global hand-held orders to fleet capacity has reached 7.2%, the lowest since the beginning of the new century, and capacity growth is expected to decline to 2.4% in 2021. Third, the mainstream ship owners strong return to book ships. In terms of order source region, in the first quarter, European and North American shipowners ordered 125 new ships with 13.84 million DWT, contributing 59% to the market.



In addition to the container ship market, oil tankers, bulk carriers, liquefied gas carriers and other market segments are also showing a recovery trend to varying degrees.



The foregoing industry analysts predict that with the recovery of global macroeconomic and trade situation and the expected positive shipping fundamentals, the new shipbuilding market will be strongly supported. The international shipbuilding market will see considerable orders in 2021, and the price of new ships will be on the path of recovery. Benefiting from the recovery of the shipbuilding market, the business performance of shipbuilding enterprises is expected to be further improved, especially the domestic listed shipbuilding companies with poor performance in recent years or the opportunity for performance recovery.



However, while shipbuilders are expected to see revenue growth, they still need to work hard on cost control as the cost of steel plate, labor and other factors still has some room to rise, which will drive up shipbuilding costs, the source said.