Chinese yards hit by weakening yen

Chinese yards hit by weakening yen

Seoul: A Korean analyst for J P Morgan has suggested that the weakening yen puts Chinese shipyards at even greater threat of extinction. Lee Sok-Je noted:  “The Japanese yen depreciated to a 20-year low against the renminbi in the currency markets. As Chinese yards have a similar product mix as the Japanese yards, largely relying on bulk carriers, the yen depreciation (68% for the past 4 years) will likely emerge as the biggest threat, in our view.”

Lee added that since Chinese bulk carriers are traded at a 20% to 30% discount in the second-hand vessel market, the vessels will be regarded as more expensive compared to Japanese bulk carriers, despite the 10% gap in the newbuilding markets.

Lee reckoned Chinese yards will have to cut their building costs by another 10% or more to maintain any competitiveness in the newbuilding market.

Japanese and Chinese yards’ order backlog is similar in that more than 50% of both nations’ shipbuilding receipts is dry bulk related.

According to a report at the end of April on Splash the other factor making Japanese yards competitive again is the cheap financing on offer from Tokyo.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.

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