SHANGHAI, Jul. 6 (SMM) – Chinese shipboard cable companies say their orders picked up this year and now expect further improvements in the third quarter given ongoing recovery in shipbuilding sector, an SMM survey reveals.
Shipbuilding Sector Bottoms Out in H2’13
China’s shipbuilding industry has been depressed through the first half last year, posing a great test for shipboard cable manufacturers. Fortunately, the industry bottomed out in the latter half of 2013. This recovery managed to continue into 2014 after the Chinese government rolled out numerous supporting measures targeting the sector.
Shipboard Cable Orders Grow
Shipboard cable companies outshone other copper wire and cable enterprises in China this year. Many enterprises reported limited growth in sales this year as real estate market has been in the doldrums.
Shipboard cable market, however, kept rallying thanks to accelerated construction of oil platforms in South China Sea and stable defense needs.
Data from China Association of National Shipbuilding Industry indicate a 160% year-on-year jump in new orders in shipbuilding industry during the first four month this year. Incremental orders totaled 30.30 million DWT between January and April, as compared with the 11.57 million DWT over the same period last year. Holding orders for shipbuilding hit 150.15 million DWT in the first four months, up 43.2% from the 104.73 million DWT a year earlier. The upbeat data from shipbuilding sector left shipboard cable companies optimistic about orders in Q3.
Profit Margins Remain High
The number of enterprises engaging in shipboard cable was fairly small in China due to strict industrial requirements and late start of China’s shipboard cable manufacturing. This, however, left less competition among producers, allowing shipboard cable enterprises to earn more than other copper wire and cable producers.
Furthermore, as aluminum is not permitted to be used in shipboard cable according to national standards and the government is unlikely to loosen the requirements for the foreseeable future, development of aluminum alloy wire and cable will have little impact on copper wire and cable applied in shipbuilding sector.
The combination of these factors leads SMM to believe that copper wire and cable comsumption in shipbuilding industry will continue to grow in the third quarter.