Chinese shipyards weather severe challenges in H1; Domestic Commodity Demand to Support Industry Over Next Half: Top Shipbuilder

Aboard the 300-meter-long, 300,000-tonne Giant Crude Oil Carrier (VLCC) moored in a bay in northeast China’s Dalian city, with humming machinery, steels piling up on the 7.74 million square meter production base, visitors can easily catch a glimpse of the shipbuilding prowess of the world’s largest manufacturing center in the bustling scene.

Manufactured by a subsidiary of the state-owned China State Shipbuilding Corp (CSSC), the country’s largest shipbuilding giant, the 300,000-ton VLCC fleet it produces accounts for about 15% of the VLCCs operating in the world. world, a company representative on site told the Global Times.

While the VLCC represents only a small fraction of the group’s business map – more than the design and construction capabilities of commercial vessels such as VLCCs, LNG carriers and other very large bulk carriers, the CSSC is also known as the birthplace of China’s most important warships. including missile destroyers, aircraft carriers as well as nuclear submarines.

CSSC, a very large defense industry company, was born from the merger of the two largest shipbuilders in the country. The merger, completed in 2019, makes it the largest shipbuilding group in the world, with a total number of employees reaching 347,000, and 106 subsidiaries located in 23 provinces, cities and regions of China.

To take a close look at the conglomerate, the Global Times visited several CSSC subsidiaries and research institutes in Huludao and Dalian in Liaoning Province (northeast China) and Qingdao in Shandong Province (east of China). China) over the weekend, to understand how China outperformed its competitors. , managed the impact of the epidemic, and the future direction of the group.

“Production orders are full”
In the first half of 2022, the industry successfully battled headwinds amid a severe epidemic situation and downward pressure on the national economy, business leaders and workers said. frontline to the Global Times during the visit, believing it was also one of the main reasons that helped it outperform competitors from countries like South Korea.

Overcoming COVID-19 and supply chain impacts, more than 10 new merchant ships were delivered as planned in the first half of the year, a 67% year-on-year increase, Yang Zhizhong, chairman of Dalian Shipbuilding Industry Co (DSIC), the largest ship assembly company under CSSC, told the Global Times in a panel interview over the weekend.

DSIC is the birthplace of China’s first 10,000 ton vessel, first export vessel, first VLCC, first 400ft jack-up drilling rig, first semi-submersible drilling rig in 3,000 meters deep water, as well as the country’s first intelligent VLCC.

“Production orders are full, accumulating until 2025 to 2026,” Yang said.

CSSC has withstood the “toughest test” since its inception (merger) in the first half of the year, the group said in a document sent to the Global Times.

The group successfully launched a third Fujian aircraft carrier in June, and major shipbuilding indicators, including the number of completed orders and new orders, all ranked among the world’s leading companies. In addition, the group’s share of newly received LNG vessels ranks first in the world, and the number of merchant vessels and marine engineering projects reached the annual target eight months ahead of schedule, the CSSC said in the report. document.

China’s shipbuilding industry achieved 18.5 million deadweight tons (DWT) of orders, gaining 45.2 percent of the global market and maintaining an overall lead, according to statistics released by the Ministry of Industry and Information Technologies (MITI).

China also ranked first for new orders, with a 50.8% share, although new orders fell 41.3% year-on-year to 22.46 million DWT, according to MIIT.

Yang predicted that the current market boom will continue until the end of the year, and could even last until the first quarter of next year.

Looking to the second half of 2022, Yang is also confident, saying that although uncertainties in the domestic economy still exist, China’s demand for commodities, the largest in the world supported by fundamentals and a recovery in the economic growth, will continue to provide a backbone for the industry. growth.

historic crossroads
Despite major indicators already pointing to China’s shipbuilding strength as the global leader, domestic industry players are now aiming for another leap to climb to the top spot of the entire industry chain with ” three transformations” on the agenda – high value-added transformation, digital transformation and “green” transformation.

The shipbuilding industry has “three pearls”, namely the construction of aircraft carriers, large LNG carriers and luxury cruise liners. Shipyards that can manufacture all three are generally believed to have achieved high-level, comprehensive strength, Yang said.

Already capable of building aircraft carriers, DSIC officially entered the large-scale LNG ship market this year, obtaining the second “pearl”. “We have signed orders for several ships in the field, which are expected to be completed and delivered within the next three to five years,” Yang said.

“We are entering the historic development window, with both challenges and opportunities ahead. We have positioned ourselves as reaching a historic intersection,” Yang said.

Efforts for the other two transformations began much earlier. For example, DSIC developed and built China’s first airfoil-assisted VLCC and dual-fuel VLCC, contributing to the rapid achievement of its carbon neutral goals.

While visiting the company’s factories, the Global Times found that robots are incorporated into most factory production lines to increase efficiency and reduce labor costs in the traditional high-intensity industry. labor intensity.

SunRui Marine Environment Engineering Co, another CSSC subsidiary specializing in ship-related products, is also targeting a growing share in the high-end sector. “We are striving to expand our presence in the European and American markets, hoping that the market share of our products can exceed that of European brands in Europe and the United States,” a company executive told Reuters on Saturday. GlobalTimes.

SunRui is the first company to conduct corrosion control research in China, also well-known for ships’ ballast water management system.
Source: GlobalTimes