Shipbuilding industry has entered a new round of rapid development

First, the world shipbuilding industry has opened a new round of industrial cycle

The international ship market is characterized by periodicity, and the factors affecting its periodicity are many and complex. The cyclical fluctuation of the world economy is an important external factor affecting the cycle of the ship market. The renewal and reinvestment cycle of ships of around 25 years is the main intrinsic factor.

Looking at the century-old history of the global shipbuilding industry, the excessive prosperity or depression of the world economy, the great changes in international maritime rules, large-scale wars and other factors will lengthen or shorten the ship market cycle. This is also the main reason for the confusing length of the ship market cycles over the past 100 years. The destruction of ship assets in the Second World War resulted in a new shipbuilding market cycle of less than 15 years; The single-hull tanker phase-out Convention adopted by IMO in 2003 and the rapid economic development of China are superimposed, which will extend the cycle of the new shipbuilding market to more than 30 years.

Since the financial crisis, the shipping and new shipbuilding markets have experienced more than 10 years of adjustment, the time span is close to half a full cycle. Today, a new round of new shipbuilding market upcycle has quietly opened.

First, the global shipping market capacity clearance has basically ended.

In the past ten years, the major ship types have gone through 1-2 rounds of large-scale capacity dismantling and large-scale bankruptcy reorganization of shipowners, the fleet growth rate has declined for seven consecutive years, and began to rebound in 2019, and the significant correction of sea traffic in 2020 has not only not formed a huge blow to the shipping industry, but has led to a significant rebound in global sea traffic and a substantial increase in freight in 2021. The BDI index, which reflects the ups and downs of the shipping market, broke through a decade-long pressure point of 3,000 points, indicating that the shipping market has emerged from the quagmire of excess capacity.

Second, the new shipbuilding market has clearly bottomed out.

At the beginning of the new century, the global shipping volume was about 6.5 billion tons, corresponding to about 50 million deadweight tons of new ships. At present, the world's maritime traffic has reached 12 billion tons, and under normal circumstances, the volume of new ships corresponding to this volume is about 90 million deadweight tons.

In the market capacity clearance stage, the volume of new shipbuilding market in 2016 was only 30 million deadweight tons; In 2017-2018, it basically recovered to the normal level of 90 million deadweight tons; Even in 2020, when the epidemic situation was the most severe and the market outlook was the most bleak, new ship transactions still reached 60 million DWT.

This shows that the new shipbuilding market has bottomed out in 2016, suffered a brief correction in 2020, and if there are no major adverse factors in the future, the annual new ship turnover can remain above 90 million deadweight tons.

Third, the international maritime Convention will accelerate the recovery of the new ship market.

In recent years, IMO legislation on environmental protection has gradually accelerated, and relevant conventions such as ballast water and sulfur discharge have come into force one after another. Under the framework of the greenhouse gas emission reduction strategy, more new requirements such as EEXI and CII will be introduced one after another.

In 2023, EEXI and CII will be officially implemented, and the final installation deadline of ballast water treatment system is September 2024, old ships need to install a variety of devices, but it is difficult to recover the investment and choose to replace; Mid-age ships need to reduce the power and speed of the main engine, thereby reducing the market capacity. New ships are rapidly shifting to alternative energy.

All these will accelerate the pace of recovery in the new shipbuilding market and promote the further increase of new ship transactions on the basis of 90 million deadweight tons.

Fourth, the capacity adjustment of the shipbuilding industry is nearing an end.

Since the financial crisis, hundreds of cases of bankruptcy liquidation and merger and reorganization of global shipbuilding enterprises have been affected by factors such as the sharp decline in orders and the continuous decline in ship prices. Among them, from 2012 to 2016, the capacity adjustment of the shipbuilding industry was mainly based on shutdown, bankruptcy and liquidation, and gradually spread from small and medium-sized enterprises to large shipbuilding enterprises; From 2016 to 2020, the adjustment of the shipbuilding industry will shift to mergers and acquisitions between large and medium-sized enterprises, including the acquisition of high-quality shipyard assets by advantageous enterprises and the merger and reorganization of large enterprise groups.

After the above two rounds of capacity adjustment, under the role of the market, the number of active monoshipyard with orders or delivery records of ships over 10,000 tons in the world decreased from 440 to about 180 in 2016, and remained basically stable; In 2020, affected by the epidemic and the market correction, the number of shipyards receiving orders or delivering ships fell to about 150. In the past three years, although the operation of shipbuilding enterprises is still difficult, the economic operation of major shipbuilding enterprises in China, Japan and South Korea is generally stable, and the production capacity clearance process has basically ended.

At present, the global shipbuilding capacity is stable at about 120 million deadweight tons, the annual completion of about 90 million deadweight tons, and the capacity utilization rate is 75%, which is at the normal level of industrial development. Judging from this, this round of capacity correction in the world shipbuilding industry is basically coming to an end. In the future, the growth of demand for new shipbuilding and the rise in raw material prices will significantly drive the rise in the price of new ships.

We believe that the long-awaited market recovery of shipbuilding industry enterprises is in front of us, the long-term passive market position is changing, and after the great waves, the shipbuilding industry will be left with a broader stage.

Second, zero-carbon ships have changed from a future trend to a reality

With the continuous promotion of IMO's global shipping greenhouse gas emission reduction strategy, the world has set off new technology and new products such as ammonia powered ships, hydrogen powered ships, Marine carbon capture, carbon dioxide carriers, hydrogen carriers and other R&D competitions. New energy power, which was mainly applied in the field of small special ships in the past, continues to spread to conventional ships such as container ships, oil tankers, bulk carriers, and car carriers, and the demand for new shipbuilding market is rapidly shifting to green ships. In the new shipbuilding orders, the proportion of dual-fuel or clean-fuel ships has reached about 30%, and the era of green ships has come.

However, due to the parallel development of different technical routes and the lobbying and voice of different international organizations for their own interests, the maritime community has not yet formed a unified opinion on the development direction of ship power.

First, any energy application can theoretically be carbon neutral.

At present, the core goal of the international community to promote climate governance is to achieve carbon neutrality, rather than eliminate fossil energy or any other kind of energy. At present, the main Marine fuels explored by the Marine industry, whether hydrogen, ammonia, LNG, LPG or methanol, can achieve carbon neutrality during energy conversion or use.

Hydrogen and ammonia can be produced by electrolysis/synthesis of renewable energy sources or by fossil energy sources; LNG itself can be a fossil fuel, but also through renewable energy synthesis, or through biomass fermentation; Methanol (CH4O) can be prepared from fossil fuels, renewable energy sources, or biomass fermentation; LPG is a mixture that is mainly formed during fossil energy extraction or refining.

These fuels are either inherently zero-carbon, even if they are fossil fuels or derived from fossil fuels, supplemented by carbon capture processes, and can still be carbon neutral. In addition, fuels such as fuel oil, LNG, and LPG from fossil energy sources can also meet regulatory requirements by paying carbon taxes or purchasing carbon credits after use.

Second, the type of fuel used by ships depends on the energy supply system formed by the whole society.

With the advancement of the global climate governance process, there will be a parallel development of three primary energy sources, including renewable energy, biomass energy and fossil energy, and have an impact on the secondary energy structure.

Electricity will still be the largest secondary energy, wind, light, water and other renewable energy generation energy storage needs, conducive to the development of hydrogen/ammonia fuel. At present, China, Japan, Europe and other countries and regions, all regard hydrogen energy as the focus of the future energy supply system.

The development of biomass energy is conducive to LNG, methanol and other fuels to expand the market space, Europe, the United States has carried out large-scale use of biomass energy. China has a huge agricultural scale and a large population, and the scale advantage of developing biomass energy, especially biogas fermentation, is more obvious.

The clean utilization of traditional fossil energy can support hydrogen, ammonia, LNG and methanol, and these four fuels may become fuel types for large-scale application in the whole society.

Finally, under the current understanding, LNG, liquid ammonia and methanol are most likely to become the main fuels for ocean-going ships.

As a Marine fuel, LNG has been applied on a large scale in real ships, and the supply chain system has been formed. Later, by installing Marine carbon capture devices, or using synthetic natural gas and biological natural gas, zero emissions can be achieved.

Liquid ammonia powered Marine main engine is currently under development, and due to the development of Marine renewable energy, liquid ammonia as a way of energy storage and transportation, the application prospects in Marine related industries are generally optimistic.

The application of methanol does not need to make major changes to the Marine internal combustion engine, if the biological methanol enters the field of transportation on a large scale (especially heavy trucks), not only can directly replace the traditional Marine fuel oil, but also can be used as a supplement fuel for LNG-powered ships and ammonia fuel ships, improving the flexibility of Marine fuel.

Hydrogen-powered vessels and electric vessels, due to their disadvantage in energy density, are more likely to achieve large-scale applications in the near future in inland vessels, tugs, small and medium-sized Marine auxiliary vessels, passenger ships and other fields.

The impact of sulfur emission limits and ballast water conventions on the industry tells us that environmental legislation in the shipping industry has become the main driving force for technological innovation in the world's shipbuilding industry. The industrial opportunities brought by a new round of technological change such as low-carbon ships and zero-carbon ships are far greater than the impact of desulfurization towers and ballast water treatment devices on the industry, which will affect many industrial chain links such as ship design, ship assembly, power equipment, new supporting equipment, repair and refitting, and is a major opportunity for China's shipbuilding industry to break through the development bottleneck and build new advantages in industrial development.

Three, offshore equipment market new track looming

Since 2014, the global Marine engineering equipment manufacturing industry has been severely impacted by shrinking demand and sky-high inventories, and a large number of enterprises have fallen into the mire and can not extricate themselves. For more than 6 years, some people have left the field sadly, some people have stuck to it silently, and the market recovery that the defenders are struggling to pursue has been delayed. However, it is gratifying that in the context of a new round of energy revolution, a new track looms, and the industrial scale is expected to grow again.

First, the offshore wind power industry has taken the lead.

Governments' support for wind power has provided a good foundation for the development of offshore wind power. In particular, from 2018 to 2020, there has been a rush to install wind power projects in China, and the demand for offshore wind power engineering equipment has increased significantly, and the new and modified wind power installation ships/platforms have reached about 20 / seat each year.

However, due to the low value of equipment, it is difficult to play a substantial role in the recovery of the Marine engineering equipment market, and after the rush to install the tide, the sustainability of the market is also worrying. With the announcement of China's carbon peak and carbon neutral targets in 2020, the confidence of the offshore wind industry has been reignited, and there are even cases of drilling RIGS costing up to $200 million to be converted into wind power installation platforms.

To be sure, renewable energy is a long-term, sustainable industry, countries around the world are strongly supporting their own enterprises to seize Marine energy resources, large oil companies, power giants have entered, especially with the increasing power of wind turbines, platform lifting capacity is getting higher and higher, offshore distance is getting farther and farther, including wind power installation ships, wind power operation and maintenance ships. The market scale of offshore wind power equipment, including floating wind power platforms, will continue to grow.

Second, new equipment systems such as Marine renewable energy bases and Marine carbon neutral infrastructure are gradually approaching.

The further development of the offshore wind power industry will give birth to offshore energy storage platforms, offshore liquid ammonia production lines, shuttle hydrogen carriers, shuttle ammonia carriers, and various types of engineering vessels and auxiliary vessels for platform construction and operation.

The construction of offshore renewable energy storage and transportation facilities will also further stimulate the development of more Marine renewable energy. In the past, offshore photovoltaic islands, tidal energy generation, salt difference energy generation, wave energy generation, etc., which have only stayed in the concept or experimental stage, will gradually have the feasibility of commercialization and industrialization with the help of offshore renewable energy storage and transportation facilities, and bring more equipment needs.

On the other hand, the realization of carbon neutrality is inseparable from large-scale carbon capture and storage, and the huge ocean area and the high-pressure characteristics of the seabed make it an important carbon storage site. As the carbon trading market continues to mature, capital's pursuit of carbon sink value will lead it to invest in large-scale carbon dioxide Marine storage projects, and the demand for equipment such as large operating platforms, underwater facilities and carbon dioxide transport vessels is worth looking forward to.

Third, offshore oil and gas development equipment will still occupy a large market scale.

Human dependence on fossil energy is not only electricity and fuel, industrial products with fossil resources as the initial raw materials have penetrated into every corner of our lives, and it is not a ban can be done. Coupled with clean technologies and large-scale carbon capture, fossil fuels will continue to play an important role in economic development. Offshore oil and gas development equipment has long been the main force of offshore engineering equipment, and will still be an important market that cannot be ignored in the shipbuilding industry in the future.

In recent years, the overall investment in offshore oil and gas development is at a low level, but there are still some large-scale offshore oil and gas field development projects put into operation. In particular, the FPSO, FLNG, FSRU and other equipment markets remain active, and the turnover in the first half of 2021 has been close to $5 billion. At present, with the gradual recovery of economic activities in various countries, international crude oil prices have risen significantly, creating conditions for the restart of many offshore oil and gas development projects.

No matter what kind of Marine resources are developed, no matter how the ocean is used, as long as Marine development is involved, it is inseparable from the support of Marine engineering equipment. Now it is Marine oil and gas resources and Marine renewable energy, and there may be more Marine production and living infrastructure in the future, requiring more Marine engineering equipment. The strategic position of the Marine engineering equipment manufacturing industry has not changed and will not change.