Global ship deliveries hit by coronavirus disruption to China yards (updated)

2020 Bulkers

12/02/2020 14:21

(Updates with further comment, detail)
    By Muyu Xu and Jonathan Saul
    BEIJING/LONDON, Feb 12 (Reuters) - Global ship deliveries
have been hit as yards in China struggle to get fully back to
work as a result of the coronavirus outbreak, with one
shipbuilder saying it could not deliver two vessels. 
    The coronavirus has caused chaos in Asia and beyond with
flights suspended, businesses disrupted and entry restrictions
imposed by governments trying to ward off its spread. The global
shipping trade has also been hit. urn:newsml:reuters.com:*:nL8N2A71CU
    China's Jiangsu New Times Shipbuilding, which has an annual
production capacity of 5 million deadweight tonnes (DWT), had
issued a force majeure notice on two vessels to Bermuda-based
cargo operator 2020 Bulkers  2020B.OL , a spokesman said.
    "Workers are still not coming back to their positions due to
the coronavirus. It is not known when they will resume work and
when the two vessels will be completed," he added.
    This confirmed a statement by 2020 Bulkers on Tuesday which
said that two newcastlemax dry bulk vessels due to be delivered
in April and May face possible construction delays. 
    China is one of the biggest shipbuilders and shipping
sources say there have been delays to vessels already meant to
have hit the water and other yards had declared force majeure.  
    "There is no real indication of when full production will
resume," one industry source said.      
    Chinese authorities have asked companies to put workers into
quarantine for 14 days after returning from their home towns for
the Lunar New Year holiday, which was extended by a week.
    The China Association of National Shipbuilding (CANS), which
represents shipbuilders, said in a statement it was "generally
hard for the vessel makers to resume work and deliver vessels on
time".
    Some of China’s shipbuilders were highly likely to be unable
to deliver vessels before July 1, which increased the risk of
not being able to fulfil their contracts, CANS said.
    Shipping sources said the delays were also having an impact
on the fitting of exhaust gas cleaning systems known as
scrubbers, which are needed to enable ships to continue to use
high sulphur fuel after tough new rules on emissions.
    "Over 70% of vessels currently undergoing scrubber
retrofitting are doing so in China. On that front, there are
on-going delays at shipyards because workforces are depleted,
taking vessels out of action," Charles Chasty, research analyst
with broker Affinity Shipping, said.
    "China accounts for over 40% of all new buildings. So,
beyond the on-going current issues, such as the depletion of the
labour force, vessels currently under construction are being
delayed. Some of these vessels may even slip into 2021," Chasty
told the Reuters Global Markets Forum.
    CANS data showed that around 75% of workers had come back to
work at key shipbuilding companies in the southeastern provinces
of Fujian and Liaoning, but only around 62.5% workers had
returned to Shanghai as of Monday.
    However, shipbuilding companies at Guangdong, Shandong and
Jiangsu, where New Times is located, were seeing workers
"gradually" restart work, CANS said.  

 (Reporting by Muyu Xu and Tony Munroe in Beijing and Jonathan
Saul in London, editing by Louise Heavens, Alexander Smith and
Nick Macfie)
 ((jonathan.saul@thomsonreuters.com; + 44 207 542 4357 ; Reuters
Messaging: jonathan.saul.thomsonreuters.com@reuters.net))