Waigaoqiao Overtakes Mipo as Fifth Largest Yard

Semi-submersible under construction at Shanghai Waigaoqiao (courtesy CNOOC)

By MarEx 2015-12-30 19:08:53

Clarkson Research has released rankings showing that Shanghai Waigaoqiao Shipbuilding, a state-owned subsidiary of CSSC, has stepped into the top five shipbuilders in the world with a backlog of 3 million compensated gross tons.

The firm displaced Hyundai Mipo Dockyard (the previous fifth largest) by a narrow margin.

The yard list has been dominated by Korean shipbuilders for some time, and Shanghai Waigaoqiao is the first Chinese firm to make the top five. Aggregate production by tonnage has been higher in China for some time, but has been spread over the many Chinese yards, preventing any individual firm from breaking into the highest ranks.

Daewoo Shipbuilding, Samsung Heavy Industries, Hyundai Heavy Industries and Hyundai Samho Heavy Industries led Clarkson's list.

Analysts forecast further declines for Korean yards as most sectors of the shipping industry contract. Korea's Exim bank released a forecast Tuesday predicting a drop in new orders of 25 percent year over year in 2016.

“Due to a severe slump in the offshore facility segment, the shipbuilding industry will continue to trend lower down the road,” the bank's research arm said in December. “Demand for LNG carriers, one of South Korean shipbuilders’ cash cows, is also likely to contract for the time being.”

The country's financial regulators have pushed shipbuilders to pursue profitability over market share and to put an end to aggressive bidding practices to attract foreign clients. The top three yards have all posted significant losses for 2015, totaling in the billions. Higher prices for newbuilds at Korean yards could provide a further opening for low-cost Chinese competitors.

Shanghai Waigaoqiao has the contract for the first Chinese-built cruise ship, to be delivered to Carnival in 2020. It also built the CMA CGM Zheng He, a sister ship of the CMA CGM Benjamin Franklin, which became the largest container vessel to visit the U.S. when it docked at the Port of Los Angeles in December. The Zheng He and her class are the largest container ships ever built in China. 

Shanghai Waigaoqiao was on the first edition of the Chinese government’s shipbuilder white list in 2014.