Due to the uncertainty of future decarbonization regulations, shipbuilding orders in 2019 have dropped sharply. This year, the uncertainty caused by the new crown epidemic has further dampened the interest of shipowners in new ships. On the one hand, this is good for future sea freight rates; on the other hand, it also leads to two risks. First, the epidemic may result in more demand for freight than capacity; second, there are so few new orders from shipyards that some Asian shipbuilding countries may take government intervention.
"Current shipbuilding orders are at their lowest level since 2017 in terms of the current percentage of new build tonnage to tonnage of vessels in motion. However, if only from the absolute point of view, assuming that future freight demand will decline, any growth of the fleet will be detrimental to the shipping industry. Even if the fleet grows by only 1% and freight demand drops by 7%, it will still lead to an excess capacity of 8%
"From the perspective of shipbuilding, we have witnessed the rapid development of China in this industry in recent years. New ship deliveries peaked between 2010 and 2012, and since then we have seen a massive overhaul of shipyards by the Chinese government. At present, there are many national leading shipbuilding enterprises in China, which can even support the idea of "meeting all China's import demand with China's built and all ships" in the future.
"I am quite sure that China will not let its shipyards go bankrupt. They have built a shipyard with considerable capacity and will certainly make good use of it.
"China is a giant in the shipping industry. They occupy almost the entire dry bulk market, and they import more crude oil than any other country. It's incredible.
"In the iron ore trade with vale, we have seen Chinese importers using large bulk carriers built in China. Chinese financial leasing companies finance Vale's orders for large bulk carriers that have signed long-term contracts to transport iron ore from Brazil to China, with Chinese buyers of iron ore on the other side.
"We can even see this trend in bauxite trade between China and Guinea, which China is fully deploying. China is building not only mines and port facilities, but also dry bulk carriers responsible for transporting minerals.
China's policy of "transportation of domestic goods"
The policy of transporting domestic goods has existed in China for more than ten years. I have been told that this is due to China's strong desire to avoid interference in transportation by foreign forces such as the United States. I believe that after the Sino US trade friction, the impact of the new epidemic will even further enhance China's willingness to build an independent and self-sufficient Global trade infrastructure. This will have a negative impact on the prospects of non Chinese shipowners.
"Back to Australia China trade relations, if China decides to import more iron ore from Brazil, but only use the new vale fleet built by Chinese shipyards, what will be the impact?
"If that's the case, I think individual shipowners will benefit. The meat is gone, but at least some soup can be served."
"I even think that if China had decided ten years ago to import goods only with Chinese ships, Chinese shipyards would have worked overtime to make new orders, and today China has even realized this idea." In fact, in the field of energy transportation, it is.
"Unlike the unpredictable political trends in western countries, the Communist Party of China has been in power for decades. Therefore, China has never been radical. He will make steady progress and finally achieve his wish. We believe that China is moving in the direction of using Chinese ships to transport imported goods. "
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