22-10-2016

Global CEOs urge shipyards to address overcapacity

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Leading executives from major shipyards in five global powerhouses — Japan, Europe, China, Korea and the US — painted a gloomy picture of the global shipbuilding industry, urging players to address a supply glut.

During a keynote speech at the 25th JECKU top executive meeting held here, Samsung Heavy Industries Co. CEO Park Dae-young said a slump in the global economy has had a negative impact on the shipbuilding sector, and the still-low oil price, despite an agreement by the OPEC member countries to cut output, has failed to induce demand for offshore facilities.

JECKU is a meeting of the top executives of leading shipyards from Japan, Europe, China, South Korea and the US

“Between January and September, new ship orders around the globe dropped by more than 70 percent to 8.66 million compensated gross tons compared to an average seen over the past five years,” Park said. “Also, new ship prices sank by 15 percent over the cited period.”

The Samsung Heavy chief also said growing protectionism, tightened regulations on the environment and others will further inflate uncertainties down the road.

Top executives from major shipyards at the meeting also called for measures to address overcapacity, as it will take a long time to see full-fledged market recovery.

“Over the past few years, ships have been built at a faster pace than an increase in maritime trade, which has resulted in oversupply,” said Shigeru Murayama, president of Japan-based Kawasaki Heavy Industries, Ltd.

“Whether to adjust output capacity is totally up to each shipyard, and in order to post sustainable growth, they should maintain their business at a manageable level based on a reasonable outlook.”

Guo Dacheng, chairman of the China Association of the National Shipbuilding Industry, also said a decline in ship prices, cancellations of new orders and a decline in new ship orders are taking a toll on the global shipbuilding sector.

“Due to a protracted slump in the global economy, it cannot be ruled out that the sector’s business conditions would further worsen down the road,” he said.

He urged participants to address oversupply around the globe and make more efforts to focus on developing high-value-added ships.

Ending their two-day meeting, the participants adopted a chairman’s statement saying that the oversupply of ships had led to a decline in prices and demand over the past years.

“We shared the view that it will take a long time to see the demand-supply gap narrow, and shipbuilders need to share a common perspective of what is necessary to help the market recover,” the statement said.

Next year’s JECKU meeting will be held in the US from Nov. 15 to 16.

Source: Yonhap

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