Ship Orders Plunged 90% Last Month on Credit, Trade Slowdown
By Wendy Leung
Nov. 7 (Bloomberg) -- Global ship orders tumbled 90 percent last month as the credit crunch damped world trade and made it harder for shipping lines to borrow money, according to Lloyd's Registers Group.
Shipowners ordered a total of 37 container ships, tankers and other vessels in October, compared with 378 a year earlier, Lloyd's Register Chief Executive Officer Richard Sadler said in an interview yesterday at a conference in Dalian, China.
Hyundai Heavy Industries Co., the world's largest shipyard, has also reported declining orders for the three months through September as shipping lines are slowing expansion plans because of a lack of financing and plunging demand for shipments of oil, raw materials and finished goods. The global full-year order tally will likely fall more than the 15 percent previously predicted by Lloyd's Register, Sadler said.
``We underestimated it,'' he added. ``On the positive side, compared to 2006, 2007 was an exceptional year.''
Contracts last year surged 50 percent to 261.3 million deadweight tonnes, according to Clarkson Plc, the world's largest shipbroker. In the first nine months of this year, orders dropped 27 percent to 142.9 million deadweight ton.
The slowdown means that some shipyards haven't taken an order since the first week of September, Sadler said.
New contracts in China dropped 62 percent to 24.35 million gross tonnes in the first ten months, he added. New orders in Korea fell 50 percent to 33.68 million gross tonnes.
Ship orders surged last year as China's economic growth boosted demand for imports of iron ore, used to make steel. The country's export growth also fueled demand for container ships to carry furniture, toys and other goods to the U.S. and Europe.
The Baltic Dry Index, a measure of commodity-shipping costs, surged to a record 11,793 on May 20, having more than tripled in three years. Rates have since tumbled 93 percent, to near six- year lows, as traders are struggling to get credit for shipments. Chinese steelmakers are also curbing production amid slowing demand for new buildings and cars.
To contact the reporter for this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net
Last Updated: November 6, 2008 21:14 EST |
