Japan's new ship orders fall y-o-y in Sep'21

In September, Japan's new ship orders from domestic customers and for export slipped by 0.4% on year to 935,550 gross ton (GT) in 22 vessels, according to new data released by the Japan Ship Exporters' Association (JSEA) on October 12. Though this was the first decline after eight consecutive monthly on-year rises, a JSEA official said that vessel orders are improving, and that last month's dip was just a pause.

Compared with August, the September order total was lower by a huge 23% but the official explained that August orders had been comparatively higher and that while the drop on-month appeared large, the slowdown in actual orders in September was because shipbuilders have started reflecting higher ship plate costs in new vessel prices.

"We heard that there are ongoing negotiations, but that vessel prices have to be reviewed or replaced, so actual negotiations are on-hold in several cases," he said.

The Association made no comment about ship-plate price rises for April-September deliveries, but steel industry sources believe the Japanese integrated mills have lifted ship plate prices by around Yen 20,000/tonne ($176/t), similar to the rise they recently won for automotive sheet from the automakers.

"Overall vessel construction costs have been increasing and now, with the large hike for ship plate - the crucial material for vessel construction - shipbuilders really need to lift their vessel prices, even if it means temporarily suspending negotiations," the official said. In any case, overseas competitors are also facing higher steel material prices so vessel owners will have to agree on the rise, he argued. "So, we expect the paused negotiations to restart soon and that contracts will be concluded in coming months," he predicted.

Over January-September, Japan's new vessel orders totalled 12.21 million GT, up 150.8% on year, according to the JSEA data. By the end of September, the Japanese shipbuilders' backlogs approximated 17.75 million GT, mostly flat on month but up 2.8% on year.

"The current order backlog is equivalent to about 1.75 years of operations, which is still below our target of 2 years," the official admitted. "But we have finally started receiving orders for delivery in fiscal 2025 (by end-March 2026) and we expect to receive more, so the shipbuilders will be able to have stable vessel construction and will consume ship plate stably too," he commented.

The latest forecast from The Shipbuilders' Association of Japan (SAJ) estimated carbon steel consumption among the Japanese shipbuilders in FY2021 (April-March 2022) at 2.45 million tonnes, down 8.7% on year, as reported.

Written by Yoko Manabe, yoko.manabe@mysteel.com