Japan's new ship orders soar 110% on year in Aug'21

In August, Japan's new ship orders including from home and abroad gained on the year for the eight consecutive month, or up 109.8% on year to 27 vessels or equivalent to 1.22 million gross tonnes (GT) in total, according to the data released by Japan Ship Exporters' Association (JSEA) on September 13, which was rather phenomenal for a summer month, a JSEA official commented.

Japan's shipbuilding industry has been clearly on the improvement, but the rise for August was rather sharp also with an 47.6% on-month incline, as usually vessel orders in summer months tend to slow down in summer months of June-August when many overseas vessel owners are on holiday, according to him.

Among all the new ship orders for August, 22 were for dry bulk carriers with 12 from abroad, he elaborated.

"Ship orders from overseas have been growing gradually, indicating that negotiations with overseas buyers have been rather smooth despite that many countries are still fighting against the new wave of the COVID-19 outbreak," he said, expecting more orders from overseas in the coming months, and Japanese shipbuilders' backlogs will increase accordingly.

Over January-August, Japan's new ship orders added up to 11.27 million GT, up 186.9% on year, and by the end of August, Japanese shipbuilders' backlogs approximated 17.77 million GT, down 2% on month but up 23.6% on year, according to the JSEA data.

The backlog was still below the minimum normal level of 20 million GT, but much higher than the recent bottom at 14 million GT, and "hopefully it will soon return to the normal level soon," the JSEA official commented.

Japanese Shipbuilders' Backlogs until FY25

Source: JSEA

Japan's shipbuilders, albeit the rising number of the new orders, are struggling with rising steel prices, and some have been re-negotiating with customers on shipbuilding contract prices or have raised their charges to reflect higher input costs including steel, and "this may run the risk of ship owners' canceling their orders," the JSEA official warned.

A sales official from a shipbuilder in western Japan confirmed the struggling, disclosing that his company is expecting much higher plate prices under April-September long-term supply deals with Japan's integrated mills without specifying the actual rises in steel prices.

"Shipbuilding contract prices are on the rise but gradually, which are unable to match the rises in steel prices, and which have put us in an awkward situation, as we had not expected such rapid rises in steel prices, and hope ship owners will understand our situation," he said.

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

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.