Singapore’s Keppel Corp and Sembcorp Marine, the world’s top offshore rig-makers, stand to be among the winners from Beijing’s moves to tighten credit amid a downturn at China’s shipyards.
The two companies have been under mounting pressure from Chinese yards offering generous payment terms, price discounts and help with financing.
That may be changing after Beijing pledged to cut credit to industries plagued with overcapacity, and China Rongsheng Heavy Industries Group, the country’s largest private shipbuilder, fell into financial trouble.
“Something like this will absolutely make everyone double-check and say, ‘Am I really sure I want to order from anywhere but the best yard?’” said Jon Windham, Barclays head of Asia industrials equity research.
Keppel reports quarterly results on Thursday, while Sembcorp Marine reports on August 1.
A number of Chinese shipyards have tried their hand at offshore equipment manufacturing as their traditional shipbuilding businesses have slowed, and are on their way to win more orders for jackup rigs than Singapore’s yards for a second year in a row. Rongsheng mainly builds dry bulk carriers and only set up its offshore rig arm last year.
Rongsheng could now become the biggest casualty of a local shipbuilding industry suffering from overcapacity and shrinking orders amid a global shipping downturn. New ship orders for Chinese builders fell by about half last year.