Shipbuilding Capacity at the Opening of a New Decade – Where Are We?

By Worldyards

We at Worldyards pride ourselves in having relatively accurate (yes, everything is relative) measures on both shipbuilding capacity and size of the orderbook, therefore we think it is appropriate to end 2009 with our final public market comment on capacity. We discussed this issue in numerous occasions in the past (see, Reality Check – 3 years on dated 18 March 2008), at most times throwing cold water into various supply-side scares such as massive delays, lack of main engine and crankshafts etc.. We do naturally track the numerous delays and failures of some shipyards before they cut the first steel. Such misfires have been part and parcel of the shipbuilding landscape for many years. Our capacity figures represent fact-based tracking of all expansions and productivity increases. These measures to record shipyard facility capacity are combined with a detailed tracking of orderbook progress to indentify instances where the contracted orderbook will fall short of projections due to either shipbuilder default (construction delays) or else buyer problems (that result in either outright default on contract or a hard-fought-for mutual agreement to terminate or reschedule). Continue Reading

Be Careful What You Wish For

Over the past several weeks Worldyards visited a number of greenfield shipyards and “potential (virtual/under construction)” shipyards in China. It is not a pretty sight. Not a lot is happening in some giant greenfield yards, either because of the cashflow constraints on part of the shipyards or shipyard wanna-bes, or on the part of ship-owners of the ships being constructed in the facilities. The premises of the “potential” yards are typically huge, strategically located and blessed with great natural conditions. We see giant holes of what are meant to be giant drydocks. But little in terms of new construction is going on and very little machinery. We are talking more than 10 VLCC drydocks at varying degrees of completeness.

There has never been a shortage of goldilocks cheerleaders in any kind of markets. The recent surge in BDI has let them to proclaim that the worst is over. They also take comfort in the increased pace of bank lending in China in January, Chinese PMI as evidence that we have bottomed out. Continue Reading

BRICs Ready for Wall of Offshore Work?

By Worldyards

We have heard extensive talk about the blame that can be laid at the door of BRICs (Brazil, Russia, India & China) for their contribution to surging oil demand. In this comment we examine the question of whether BRICs can be part of the solution in getting oil out of the ground. As trackers of shipbuilding and offshore facilities, we have covered in depth the acceleration in shipbuilding and offshore fabrication by BRICs.

As a point of reference, we note the International Energy Agency (IEA) Medium-Term Oil Market Report in early July, which sees “new project start-ups during 2008-2010, allied to weaker economic growth, providing potential spare capacity rise in excess of 4 MB/D.”

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Questionable Shipbuilders

Worldyards issued a report recently to stem the “bashing” of greenfield developments in China by analysts and shipping company management alike. Rather than defending Chinese greenfield yards, the report seeks more to temper a stream of sentiment against these yards, noting that it would be unwise to categorically paint Chinese greenfield yards with the same negative brush and that, while Chinese yards may be an obvious target, they don’t have a monopoly on potential failure.

Looking deeper, the Worldyards report sought to point out the vast variations among greenfield yards saying: Continue Reading