Chinese shipyard profitability: high ship prices combined with falling steel prices, shipyard profitability is expected to improve significantly
New ship prices remain high and steel prices continue to fall, and shipyard profitability is expected to be greatly improved. Continued tight shipbuilding capacity and inelastic supply will keep ship prices high, while steel prices continue to fall, and steel and plate prices are now down about 35% from the cycle peak (May 2021), The price of Clarksons new ships has risen by about 30% from the low point of the cycle (November 2020), and the price of new ships has continued to rise and the price of steel has fallen to form a scissors difference trend. At the peak of the last cycle, China's gross profit margin and net profit margin reached 27.84% and 19.76% respectively, while the industry bottom was 8.49% and -0.84%, respectively. With the delivery of high-priced ship orders in 2023, we believe that the profit side of shipyards is relatively flexible.
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