Asian shipbuilding industries:Japanese yards,No.1orders in 2015but fully booked
In 2015 Japanese yards achieved #1 in new orders far ahead of Korean andChinese peers at 35% global market share, for the first time since 1997. Marketshare gains in bulk carriers from Chinese yards and orders ahead of regulationwere the reasons. But, the lack of ship design capacity is another reason to beconsidered. We now expect beneficiaries to be Korean yards with earlier deliveryslots and MES with confirmed engine revenue growth until 2019.
The biggest orders since 2006 and No. 1 market share. We expect Japaneseyards to have secured No. 1 market share in new orders in 2015 at 13.5mn CGT,33% bigger than Chinese and Korean yards each. Export orders to Japaneseyards increased by 150% YoY (source: JSEA) in 2015, after 102% surge in2014. Clarksons reported 9.1mn CGT orders by Japanese yards in total but weexpect gradual revising up of the figures considering the different reportingsystem used by Japanese yards.
Market share gains from Chinese yards. Japanese yards signed 291 bulkcarriers (33 from local owners and 258 from foreign owners) in 2015, vs. only73 ships signed by Chinese yards. Despite the weak BDI, Japanese yards couldrestore their dominancy in the bulk carrier market through 20~30% pricepremium in the secondhand market, proven quality and weak JPY against RMB.
But proof of lack of designing capacity. But the substantive orders toJapanese yards are not fully positive. The orders are already two times biggerthan their annual capacity and in our view have proven the lack of designingresources of their yards. As the mass of new regulations start from Jan. 2016contracts (IMO’s MEPC and MSC), the best strategy to cope with the scarcedesigning resources was to take as many orders as possible before the starts.Now, Japanese yards have the longest delivery schedule, until 1H19. Shipowners have to wait until 2H19 or 2020 to take delivery from Japanese yards innew contracts.
Beneficiaries of far-dated order books: Korean yards and MES. Japaneseyards are fully booked until 1H19 as 2015 orders were equivalent to 2-yearcapacity. Early delivery slots in 2018 can only be secured in Korean yards andthey are likely to wage bigger bargaining power. Substantive orders to Japaneseyards will benefit MES supplying half of the ship engines to Japanese yards.