Japan's shipbuilders record y-o-y jump in Nov orders

Japan's major shipbuilders won more orders for ships for export than they'd expected in November though ship prices and prices of essential inputs such as ship plate remain a concern.

Statistics released Wednesday by the Japan Ship Exporters' Association (JSEA) show that the Japanese builders secured orders for 23 vessels last month, equivalent to 922,697 gross tons (GT). This represented a slight 5.1% reduction from October, but it was a huge 87% jump on the November 2022 result, the data show. This time last year, the global shipping industry was still slowly emerging from the ravages of the COVID pandemic, Mysteel Global notes.

"The November order total was more than we'd expected, but we were confident the Japanese shipbuilders would have stable orders because we had heard they were in negotiations with customers and that orders would likely be placed soon," a JSEA official said.

Meanwhile, last month, the Japanese yards also completed 17 vessels, equivalent to 821,389 GT, only 0.5% up on October deliveries but 5.3% higher than the year ago level. The total was also the highest since July, suggesting that the yards are slowly picking up the pace of construction.

However, this is not evident from the most recent Japan Iron & Steel Federation (JISF) statistics for September which showed that orders for ordinary steel for the shipbuilding and marine equipment sector reached 217,000 tonnes that month, lower by 8.3%% from August but and only higher by 1.5% from September last year. The JISF's statistics for October orders will be announced on December 18.

For the Japanese builders, steel prices remain a major issue. While the Japanese are paying approximately Yen 120,000/tonne ($845/t) for ship plates - about the same as the South Korean shipbuilders -the Chinese yards are believed to be paying Yuan 4,014/t- equivalent to about Yen 80,000/t or $563/t, the JSEA official maintained.

"A VLCC-sized vessel (Very Large Crude Carrier) needs about 40,000 tonnes of steel, so the gap in steel prices will be huge," he explained. "There is no way for the Japanese builders to compete with the Chinese." The Japanese shipbuilders are steadily receiving export ship orders, but most are being placed by Japanese ship owners "with just the registration abroad," he said. Moreover, industry watchers say the Japanese integrated mills were trying to add Yen 20,000/t for January-March 2024 ship plate prices.

Meanwhile, at the end of November, the Japanese builders were holding ship export orders totalling 521 ships in 22.43 million GT, the JSEA statistics show, sufficient to keep the yards in operation for 2.6 years.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.