China’s Shipbuilding Industry in 2024

China has maintained its leading position in the global shipbuilding market for the fourteenth consecutive years. The three major indicators—deliveries, new orders, and orderbook—have all experienced growth post COVID-19, solidifying China's dominance in the industry.

Delivery and new orders, in the first quarter of 2024, Chinese shipyards delivered a total of 12.7m deadweight tons (Dwt), marking a 20.9% year-on-year increase. Despite a slight decline of 4.83% in dry bulk carrier deliveries. The Chinese yards have shifted their focus to more complex ship types, particularly gas carriers. New orders in the first quarter reached 22.2 million Dwt, raising the total orderbook to 175.5m Dwt, which constitutes 59.1% of the worldwide orderbook. The Dry Bulk segment had a 33.5% year-on-year increase to 67.8m Dwt, which account for 38.6% of all orders taken by Chinese yards.

Economic impact of the Chinese shipbuilding revenue surged dramatically to $67.9bn in the first two months of 2024, up 173% year-on-year, driven by higher global newbuilding prices. The increase in the volume of new orders from 16.1 million Dwt in 1Q23 to 22.2m Dwt in 1Q24 reflects the economic boost to the yards, despite higher shipbuilding costs and late delivery.

The global fleet orderbook has been on the rise since its lowest level in 2020, reaching 4,572 units by the fourth quarter of 2023, a 64.5% increase. China’s shipbuilding orderbook surged by 88.3% to 2,539 vessels, holding 55.5% of the total. South Korea and Japan's orderbooks remained relatively stable, together comprising 31.3% of the total.

Growth of China’s shipbuilding industry has seen significant since its accession to the WTO in 2000, with the number of shipyards peaking at 342 in 2008. However, the financial crisis led to overcapacity, bankruptcies, and restructuring. Currently, the number of active shipyards averages around 175. Chinese yards have shifted their focus from dry bulkers to high value-added and low-carbon ship types, such as large-scale cruise ships and LNG carriers.

China's shipbuilding industry is expected to remain robust, with yards largely full until 2027 and orders extending to 2029. The demand for new ships is driven by the need to replace aging vessels, particularly those built around 2010, and by the growing requirement for low-carbon ships. The orderbook-to-deliveries ratio has been increasing, indicating a faster demand growth for new orders compared to the capacity to build new vessels.

The top five shipyards - CSSC Group, COSCO Group, Jiangsu Hanjiang Group, Nantong Xiangyu Group, and Yangzijiang Group - account for 62.9% of the global orderbook. Various mothballed yards are being reopened to meet the growing demand, such as Hengli Heavy Industries running the assets of STX Dalian and Wuhu Shipyard taking over former Samjin Shipbuilding facilities.

Challenges ahead despite its strong position is that the industry faces hurdles from instable chartering markets that impact shipowners’ cash on hand, furthermore shipyards need to address labour shortages and rising wages, timely delivery of vessels, and managing increased costs for ship equipment procurement. Measures such as hiring more foreign workers and government support are being implemented to mitigate these challenges.

In conclusion, China continues to dominate the global shipbuilding market, driven by strategic shifts towards complex ship types and significant economic growth. However, the industry must navigate various challenges to sustain its leading position and meet future demands.