As forewarned in December, Chinese shipbuilder Rongsheng Heavy Industries, posted a 2012 loss of USD $92 million, the opposite of the $90 million profit they were predicted to achieve according to an average of 5 analyst estimates compiled by Bloomberg last year.
With slower growth of global trade and an average drop of 40.6% in the Baltic Dry Index over 2011’s figures, enormous pressure was placed on both the shipping and shipbuilding industries in 2012.
According to Clarkson Research, new shipbuilding orders worldwide decreased 44.5% year-on-year as measured in deadweight tonnage and new shipbuilding orders in China fell 45.2% year-on-year in 2012. New shipbuilding prices were also under severe pressure as reflected in Clarkson Research’s new shipbuilding price index which fell 9.2% in 2012.
Rongsheng reported today that only two new shipbuilding orders were placed in 2012, consisting of a pair of Panamax bulk carriers at a total contract value of USD $55.6 million.
Their order book at the end of 2012 consisted of 91 vessels, representing a total volume of approximately 13.0 million DWT with a total contract value of approximately USD5.0 billion. All vessels are scheduled to be delivered by 2015.
Their order book includes:
- 43 Panamax bulk carriers
- 15 very large ore carriers (VLOCs)
- 1 Panamax crude oil tanker
- 23 Suezmax crude oil tankers
- 2 very large crude oil carriers (VLCCs)
- 1 6,500 twenty-foot equivalent unit (“TEU”) containership and,
- 6 7,000-TEU containerships
According to Clarkson Research, the above-listed orders account for an 11.9% market share in China and 5.0% worldwide market share measured by DWT, ranking first in China and third in the world.
In 2012, Rongsheng delivered 21 vessels which tallied up a record high of 3.9 million DWT, an increase of 49.7% year-on-year.
Looking ahead, Rongsheng believes that “the overall shipbuilding industry already reached the trough of the industry cycle,” and that there will be limited room for further decline in shipbuilding prices.
Full recovery of the shipbuilding industry, they note, depends largely on global economics, however they are eyeing the emergence of the eco-ship market as a potential growth opportunity.
Their 2012 loss reported today is the biggest loss since their company went public in 2007.