Drewry bullish about shipyard prospects

DREWRY Shipping Consultants said in a recent report that it believes there are growth opportunities for shipyards because of the continuing rise in world trade.

The report was commissioned as part of a circular distributed to independent shareholders of Titan Petrochemicals Group Limited in connection with a proposed acquisition of Titan Quanzhou Shipyard, a multi-functional shipyard in Fujian province.

"We are pleased that the Drewry report appears to confirm our view of a favourable market environment for Titan Quanzhou Shipyard. I believe the market opportunities identified support our rationale for acquiring this high potential asset," said Titan CEO Barry Cheung.

According to Drewry research, global sea trade has grown 4 per cent a year since 1990. Serving this trade are more than 49,500 vessels in the world's cargo fleet, with 6,900 more ships on order.

Continued trade growth, an aging fleet and other factors combine to enhance prospects for ship repair and shipbuilding, said Drewry. The firm's researchers also estimates that over 13,000 vessels are dry-docked for repair each year, leading to over 72,000 dry docking days a year for ship repair yards.

Shipyard order books are strong, with China accounting for an increasing market share. In the past five years, vessels on order have more than doubled to 6,900, while prices have risen by more than 50 per cent, the report states.

Titan Quanzhou Shipyard is a multi-functional yard covering ship repair, offshore engineering and specialised shipbuilding. Operations began in 2006 and the facility is to be fully operational by 2009, by which time it will be able to repair up to 250 vessels and build 26 ships each year.

The yard's shipbuilding unit has 22 ships on order (mainly oil and chemical tankers), with a value of US$210 million, for delivery between 2007 and 2009.