Japanese yards on edge as orderbook dries up

Japanese yards on edge as orderbook dries up

A strong Yen and very limited appetite for new tonnage has pushed Japanese shipyards into a dangerous position. New orders in the first half plunged 82%, the worst performance seen since 2008.

Japan’s yards have become famous for dry bulk ships – a sector that has been especially reticent to order new tonnage in the last couple of years as it fights extreme overcapacity amid record low rates.

June was especially bad for the Japanese yards, despite their strong presence at Posidonia in Athens. Orders last month were for just four ships, totalling 162,700 gt, down 97% year-on-year, the worst month in the 21st century for the nation’s yards.

Many yards are still marketing 2018 delivery slots, which could lead to a significant price drop to keep drydocks busy.

Speaking with Splash last week, the president of Clarkson Research, Dr Martin Stopford said that with global shipbuilding output at least 30% above the underlying demand for new ships, current output could only be sustained by “heroic price cutting”.

“Cutting capacity makes sense,” Stopford said, “but with the market split 37% China, 35% South Korea and 19% Japan it’s a game of chicken for who cuts first and most.”

Stopford also questioned whether the cuts are in capacity or prices.

“Don’t rule out some big price cuts,” he told Splash.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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