As of the end of Q1 2025, the order backlog of global shipyards continues to grow, totaling 0.381 billion deadweight tons / 0.162 billion gross tons, an increase of 2% / 1% compared to the end of 2024.
According to the Zhito Financial APP, Soochow has released a Research Report stating that orders on hand at shipyards are continuing to grow in Q1 2025. As of the end of Q1 2025, the total orders on hand at global shipyards reached 0.381 billion deadweight tons / 0.162 billion gross tons, an increase of 2% / 1% compared to the end of 2024. The expected delivery volume for global shipyards in 2025 is 97.28 million deadweight tons / 44.63 million gross tons, a year-on-year growth of 9% / 9%. The supply-demand gap in the ship industry remains significant, with the order coverage rate held by global shipyards in 2024 reaching 3.8 years, at a historical high. At the same time, the proportion of capacity of orders held is 12%, which is at a historically low level. By the end of Q1 2025, the average age of the global fleet reached 13.1 years, a year-on-year increase of 3%, and it is expected that the aging of ships will continue to drive demand for replacement in the next 10 years.
Soochow Securities' main viewpoints are as follows:
The delivery structure of shipyards continues to be optimized, and profit improvement is significant.
In 2024, the ship Sector achieved revenue of 210.3 billion yuan, a year-on-year increase of 12%. Benefiting from high industry prosperity and the fulfillment of orders on hand, the growth rate remains steady. The net income attributable to shareholders reached 7.2 billion yuan, a year-on-year increase of 103%. The proportion of high-priced, low-cost orders in the shipyard delivery structure continues to rise, the earlier burden is gradually cleared, and profits are reaching an upward turning point.
Looking ahead, the ship Sector has a full backlog of orders, and the proportion of high-priced ships continues to increase, with revenue still expected to continue growing and profit margins to keep recovering: (1) High-priced orders continue to be delivered. The ship prices in this cycle have been rising since 2021, with year-on-year increases of 22% / 5% / 10% / 6% from the end of 2021 to the end of 2024. The ratio of high-priced orders in the delivery structure of China CSSC continues to grow year by year: among the delivery orders from 2024 to 2026, the proportion of contracts signed in 2021 is 65% / 7% / 0%, and profit margins are expected to continue to improve. (2) A price gap has formed between raw materials and ship prices, helping to continuously improve profitability.
Ship prices and orders on hand remain high, and the supply-demand gap in the ship industry remains significant.
In Q1 2025, the new ship price Index maintained a high level, reaching 187 at the end of Q1 2025, a decrease of 1% from the start of 2025. The new ship price Index for various types of ships fluctuated at high levels. Orders at shipyards continued to grow, with a total of 0.381 billion deadweight tons / 0.162 billion gross tons in hand by the end of Q1 2025, an increase of 2% / 1% compared to the end of 2024. The global shipyards' delivery volume is expected to reach 97.28 million deadweight tons / 44.63 million gross tons in 2025, a year-on-year increase of 9% / 9%. The supply-demand gap in the Ship Industry remains prominent, with the global shipyards' order coverage ratio reaching 3.8 years, a historical high, while the share of capacity in hand orders is 12%, a relatively low historical level.
The rigid supply and the subsequent support from bulk carriers will uphold the industry's prosperity, and sanctions will be difficult to shake China's global leadership in shipbuilding.
In Q1 2025, the global new ship market orders declined year-on-year. According to Clarkson, the new orders signed by global shipyards in Q1 2025 amounted to 19.8 million deadweight tons / 8.95 million gross tons, a year-on-year decrease of -56% / -46%. The amount of new signed orders was 29.9 billion USD, a year-on-year decline of -35%. This is mainly due to ① the Red Sea crisis in 2024 brought substantial profits to shipping companies, prompting investment decisions and leading to a pre-pull of demand; ② shipyards had full orders on hand, long delivery cycles, and maintained high ship prices, compounded by the uncertainty in global trade amid the 301 investigation & US tariffs, leading to strong client wait-and-see sentiment.
Looking ahead, in 2025, due to poor market sentiment and prior demand being exhausted, orders will decline significantly. However, since it takes 18-24 months from order to delivery, shipyards are expected to gradually release some delivery capacity starting from 2026, driving the recovery of new ship demand.
Investment advice.
The 301 investigation and sanctions are favorable to the shipbuilding industry in Japan and South Korea and Southeast Asia, but Japan and South Korea have significant deficiencies in labor supply, and Southeast Asia's industry chain maturity presents challenges. Therefore, in the short term, China's leadership in the global shipbuilding industry is unlikely to be shaken, and the market share is still expected to stabilize around 50% in the medium term.
Looking to the future: (1) As of the end of Q1 2025, the average age of the global fleet reached 13.1 years, a year-on-year increase of 3%, and it is expected that aging ships will continue to drive replacement demand in the next decade. Based on forecasts from Clarkson and UNCTAD regarding future marine trade volume and fleet scale growth, as well as the existing fleet age structure, conservative estimates for the annual delivery demand for ships globally from 2025 to 2030 are about 0.11 billion deadweight tons, with the replacement demand exceeding 50%; (2) Oil tankers, bulk carriers, container ships, and LNG carriers are mainstream ship types globally, and bulk carriers have not achieved significant growth in this cycle, potentially becoming a core focal point in the ship industry.
Regarding the symbol.
Recommend the ship assembly listed platform China CSSC (600150.SH), suggest paying attention to the core symbol of the ship power system China Shipbuilding Industry Group Power (600482.SH), and the high-quality shipbuilding assets to be injected into Guangdong Songfa Ceramics (603268.SH).
Risk Warning
Risks of material price fluctuations, exchange rate fluctuations, and intensifying competition in the industry.
