BMI View: China's trade deals continue to offer some hope for the country's shipyards, a sector which has struggled due to the tough operating environment in the global shipping sector. The latest example of this is the Chinese shipbuilder Bohai Shipbuilding Heavy Industry (BSIC) which has won an order from the China Venezuela Shipping Company (CVSC) for two very large crude carriers (VLCC). These will play a role in shipping oil from Venezuela to China as part of a deal between the two for Venezuela to provide China with 400,000 barrels per day (b/d) between 2015 and 2025.
CVSC, also known as Zhongwei Shipping is a joint venture tanker company between China's China National Petroleum Corporation (CNPC) and Venezuela's Petróleos de Venezuela (PDVSA). The company has ordered two 32,000 deadweight tonne (DWT) VLCCs at BSIC. The ships are scheduled for launch in 2014 and CVSC has options for two more vessels at the yard.
The deal highlights a trend that BMI has been tracking of China using its considerable clout in trade deals to gain orders for its domestic shipbuilding sector. As part of an oil-for-loans deal CNPC has gained access to Venezuela's Junin Block in the Orinoco heavy oil belt. Under the deal Venezuela is to provide China with 400,000b/d between 2015 and2025. CVSC will be heavily involved in meeting the shipping needs of this deal and its connection with China means that its fleet expansion projects were always going to benefit Chinese yards.
|A Tough Operating Environment|
|South Korea, China and Japan Shipbuilding New Orders (000DWT)|
This is good news for China's shipbuilding sector which has been buffeted by the tough operating environment emanating from the shipping sector, with newbuild orders volumes dropping substantially. China's shipbuilding sector dropped from first place, a position it held for 2009 and 2010, globally in terms of newbuild orders to second place in 2011. Latest data for H112 indicates that even in second place the country is not safe with Japan's volume of newbuild orders just 688,000 DWT behind it, compared to a 3.2mn DWT gap in H111. In H112 we highlight that China's newbuild orders are down 30.5% y-o-y.