The Zhitong Finance App learned that Guotai Junan released a research report saying that in the past three years, the boom in the shipping sub-industry has continued to rise, and orders for container ships, LNG carriers, Ro-Ro ships, and finished oil tankers have been placed on a sequential scale. Increased shipyard order coverage supported the upward boom in the shipbuilding industry. The new shipbuilding price composite index continued to rise in 2021-23, steadily rising in 2024, and is close to the high point of the previous cycle (August 2008). Considering the continued capital expenditure intentions of shipping companies based on larger ships, leading companies may continue to order additional ships in 2024. Unlike the previous cycle, it is expected that production capacity constraints in the current shipbuilding industry will be better than in the previous cycle, and tight platforms and high ship prices will continue to be high in the next few years.

Guotai Junan's main views are as follows:

From 2002 to 2008, the shipping boom resonated and increased, driving the shipbuilding cycle

Since China joined the WTO in 2002, China undertook the outsourcing of European and American manufacturing, and the economy has risen and urbanization has begun. China's power has driven continuous strong demand for consolidation, dry bulk cargo, and oil transportation. The economy resonated and rose from 2002 to 08. In the early days of the rise in the shipping boom, differences in shipowners' expectations clearly led to active second-hand ship transactions and relatively limited orders for new ships. As the shipping boom rises year over year, it catalyzes shipowners' optimistic expectations for an upward trend and continued consistency, and the increase in the return on investment of new ships has driven shipowners' willingness to spend capital expenses. The wave of orders began in 2006. The sharp rise in order coverage from global shipyards supports high ship prices, and relatively relaxed regulations and high-margin orders drive the shipbuilding industry to expand production significantly.

The expansion of production and technological upgrading of China's shipbuilding industry helped increase its global share to over 40% in 2010

The shipping boom continued to be sluggish in 2009-2019, and shipbuilding production capacity was sufficient. In the last cycle, the shipbuilding industry greatly expanded production, which gave negative feedback on the decline in shipping sentiment. In 2008, the global share of new ship orders reached 55%. The financial crisis catalyzed a slowdown in the growth rate of shipping demand. More importantly, the expansion of production in the shipbuilding industry accelerated batch delivery of new ships, and accelerated the decline in the shipping industry since the second half of 2008. Shipowners' orders have shrunk significantly, while the shipbuilding industry continues to expand production, and production capacity peaked only in 2010, and shipyard order coverage continued to drop to overcapacity. At the bottom of the long shipping cycle that followed, shipyards faced debt difficulties and cash flow pressure, and shipbuilding production capacity gradually cleared up, leaving deep memories for the industry and having a profound impact on future shipbuilding capacity constraints.

From 2020 to 2024, the shipping boom continued to rise, once again driving the shipbuilding cycle

In the past three years, the boom in the shipping sub-industry has continued to rise, and orders for container ships, LNG carriers, Ro-Ro ships, and finished tankers have been placed on a sequential scale. Increased shipyard order coverage supported the upward boom in the shipbuilding industry. The new shipbuilding price composite index continued to rise in 2021-23, steadily rising in 2024, and is close to the high point of the previous cycle (August 2008).

Guotai Junan believes that currently orders for new ships in the world account for 14%, and there are obvious differences between ship types. The difference in the increase in the price of new shipbuilding by ship type reflects differences in shipowners' willingness to spend capital. Among them, 10,000 container ships took the lead in reaching record highs, refined tankers rose significantly and faster than crude oil tankers, and the increase was relatively low for dry bulk carriers. Considering the continued capital expenditure intentions of shipping companies based on larger ships, leading companies may continue to order additional ships in 2024. However, the pace at which oil tankers place orders will depend on consistent expectations for a continued future oil transportation boom and the maturity of new low-carbon energy ship power technology. Unlike the previous cycle, it is expected that production capacity constraints in the current shipbuilding industry will be better than in the previous cycle, and tight platforms and high ship prices will continue to be high in the next few years.

Investment advice: The shipping boom in the past three years has continued to rise and large-scale orders have not only driven the shipbuilding industry to rise, but will also create supply bottlenecks for shipping in the next few years. In the past two years, demand for oil transportation has increased dramatically due to trade restructuring and eastward movement of refineries under anti-globalization, and the boom in the oil transportation industry has clearly risen. Demand for oil transportation is expected to continue to grow steadily in the next few years. Tight platforms and insufficient willingness of shipowners to place orders will continue to highlight the rigidity of the supply of tankers, and the rise and continuation of the oil transportation boom will exceed expectations. Maintain increased holdings ratings such as China Merchants South Oil (601975.SH), COSCO Marine (600026.SH), China Merchants Shipping (601872.SH), and China Ship Leasing (03877).

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