Marine Industries Global Market Analysis - Marine Institute

MARINE INDUSTRIES GLOBAL MARKET ANALYSIS
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20 Shipbuilding
1999–03 2004 2005–09
Irish Market €M 2 0 2
UK Market €M 1,001 234 928
Europe Market €M 63,913 13,143 52,076
World Market €M 183,440 37,746 155,017
Definition – total capital value of ships =>100GRT. Excludes naval vessels.
20.1 INTRODUCTION
The world shipbuilding industry is currently enjoying a strong upturn due to the
major growth in demand for shipping discussed earlier.World economic growth is
buoyant and it is expected to remain so in the medium term boosted by the very
strong growth of the Chinese economy and, to a lesser extent, that of other
developing economies.World seaborne trade has increased with exports of
containerised goods and imports of commodities such as oil & steel.The commercial
shipping industry has become more profitable than at any time during the previous
decade and ship-owner confidence has grown.The overall result has been a surge of
orders for vessels and yards currently have full order books, newbuild tanker prices are
up by 40% and average delivery time extended from two to three years. 69
It is unlikely that such high economic growth rates can be sustained and in 2007–8
we expect a return to more normal activity levels as the new tonnage is absorbed by
the market. As a result, many shipyards are not adding further capacity. Shipbuilders’
profits have been hit by a combination of a large rise in steel prices and a fall in the
US$. A result is that South Korean yards are reported to be targeting fewer orders in
2005. 70 For over a decade the prices of newbuilds has been on a downward trend.The
1990-based US$ index had fallen by 50%, mainly due to chronic overcapacity
resulting from government subsidies, often attacked by the EU to little effect. 71
A resumption of the lower long-term growth trend is, however, likely in the
foreseeable future. From some $35 billion in 2000, we expect the total value of
shipbuilding output to peak at around $45 billion in 2004–2006, and then fall to
$39bn in 2008 before returning to its underlying long-term growth trend. However,
as shown in an earlier chart, the recent major variations in the euro/dollar exchange
masks this dollar market rise.
The industry has, over the longer term, produced an average of some 1,800 vessels
per annum. Notable changes in the market have included a trend towards larger
vessels, especially container vessels and tankers.We believe that this will continue but
will not appreciably affect the average size of new vessels constructed during our
forecast period.
There has been a growth in average vessel size and we may well see 10,000+ TEU
container vessels before 2008 but their numbers will be small.
69
‘Lloyd’s List’ Annual Review 30 December 04.
70
‘Lloyd’s List’ 5 January 2005, p1.
71
‘Report from the Commission to the Council on the Situation in World Shipbuilding’, Commission of the European
Communities, 2003.http://europa.eu.int/comm/enterprise/maritime/