Japan's ship orders down 44% y-o-y in Sept

In September, Japan's new ship orders from both home and abroad slumped by 44.2% on year to 521,690 gross tonnes (GT) or in 16 vessels, according to the latest data released by Japan Ship Exporters' Association (JSEA) on October 13.

However, a JSEA official believed the drop was only temporary because demand for eco-friendly vessels has been growing, though sales negotiations must have prolonged over the rise in material prices including steel.

Japan's new ship orders in September were up 5% on month, and the total over January-September approximated 9.43 million GT, down 22.8% on year, according to the data.

"Japanese shipbuilders have about two years of operations for backlog orders, so they have been operating at high levels, and steel consumption remains active," the official added.

He shared that Japanese shipbuilders are believed to have agreed to add Yen 20,000-30,000/tonne ($136-204/t) to ship plate prices over April-September with domestic integrated mills and the further rise in the current half year is also expected.

"Shipbuilders have to include the rise in material prices to vessel prices. But the hike is substantial, and customers are trying to narrow the price increment, so negotiations are taking more time to be concluded," he explained.

A sales official from a shipbuilder in western Japan shared that ship plate prices have reached the highest ever - about the double of those in 2020.

"We expect plate prices to become higher in the current quarter, and the price hike is not only for plate but others including energy and delivery fees, as we cannot digest the hike only by our efforts but need to transfer it to customers," he emphasized.

"But ship owners will have to install more eco-friendly vessels in accordance with environmental regulations, so they will start agreeing on higher vessel prices and more orders will be placed," he predicted.

The backlog orders held by Japanese shipbuilders totaled 21.27 million GT by end-September, up 19.8% on year but down 1% on month, according to the JSEA data.

The latest data released by Japan Iron & Steel Federation showed that carbon steel booked by Japanese shipbuilders over January-July approximated 1.68 million tonnes, up 14.1% on year.

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

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