It is the time to consider when shipbuilding industry can restore its growth rather than possibilities to receive new ship orders. A 15-year-or-so boom cycle in shipbuilding industry is again on its way.
Boom cycle in shipbuilding industry usually include a 5-year boom and a 10-year recession. Recently, ship rents and prices both have been at favorable levels and good news were heard from ocean engineering equipment market. Therefore, it is estimated that orders in the last half year of 2017 and the first half year of 2018 will increase. According to ship price index trend in the past 36 years, there will be a sharp growth in a cycle of around 15 years, usually lasting for 5-6 years; therefore, investors of shipbuilding and shipping business need to make profits within 5 years and wait for new opportunities for the next 20 years.
From 2016 to 2017, share price of shipbuilding industry already showed a sharp increase. However, this might be merely a start: if the boom cycle begins, there will be profits in the next 5 years.
Three major ship enterprises of South Korea gained orders of USD 7 billion last year, in which Hyundai Heavy Industries Co., Ltd. (including its subsidiaries Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries) received orders of USD 5 billion and Daewoo Shipbuilding & Marine Engineering USD 1.55 billion. Samsung Heavy Industries only gained orders of USD 520 million. In this year, orders of three major ship enterprises have added up USD 10 billion. Orders of Samsung Heavy Industries reached USD 4.8 billion, accounting for 74% of its annual goal–USD 6.5 billion. If it keeps the momentum, the three ship enterprises of South Korea are expected to achieve the goal of USD 20 billion. Compared with USD 7 billion of last year, orders of shipbuilding industry in South Korea have soared, demonstrating the overall recovery of shipbuilding industry.
Reference
China Shipbuilding Industry Overview, 2016-2020
The shipbuilding completion amount was 41.84 million DWT with an increase of 7.1% YOY in China in 2015. New orders were 31.26 million DWT with a decrease of 47.9 % YOY.