Japan’s new ship orders down 32% y-o-y in May’22

In May, Japan’s new ship orders from both home and abroad decline by 31.6% on year to about 1.18 million gross tonnes (GT) or in 20 vessels, according to the latest data released by Japan Ship Exporters’ Association (JSEA). Although the backlogs held by Japanese shipbuilders were higher, a JSEA official was not concerned much about the drop.

“The drop was mainly due to the high base a year ago. We basically understand that demand of environmental protection measures has been firm and Japanese shipbuilders have expected orders to be placed, so the drop in May is believed to be just temporary,” the official said.

He added those orders in May declined but the backlog orders held by Japanese shipbuilders have risen, so their operations have stayed at high levels and have been consuming more steel.

“Japanese shipbuilders are currently delivering vessels which were ordered about two years ago and most are paid in foreign currency, so the recent depreciation of Japanese Yen is a positive factor for them. But the prices of steel that they are consuming now are much higher, making the merits of exchange rate less advantageous,” he lamented.

Shunichi Miyanaga, chairman of The Shipbuilders’ Association of Japan, also chairman of Mitsubishi Heavy Industries, commented at a conference on June 16 that the backlog orders held by Japanese shipbuilders have been improving, and the volume has reached that is equivalent to about 1.5 years of construction.

“But shipbuilders’ financial conditions have yet to improve because steel prices have risen by about 70% since the autumn of 2020, while vessel prices have risen only by 20%,” he said.

By the end of May, the backlogs held by Japanese shipbuilders approximated 2.09 million GT, up 23.3% on year and 2.5% higher on month, marking the second month to be above 2 million GT, according to the JSEA data.

Written by Yoko Manabe, yoko.manabe@mysteel.com