Stimulus plans - Ship industry package to help steel industry

It is reported that the lately released revitalization plan on ship industry will spur steel industry's rebound and help steelmakers overcome recent crunch.

Data shows the world will consume 15 million tonnes of steel products, if global shipbuilding capacity reaches 60 million dead weight tons per year.

Ship industry in China is one of the eight major steel users with annual steel demands at 5 million tonnes to 6 million tonnes, in which shipbuilding plates take up 80% to 90%. These figures are just for building ships, and don't include steel consumption in ship devices and infrastructural construction for shipyards. Thus it can be seen that steelmakers will eye a big appetite of shipbuilders after the revitalization plan puts into practice.

At present, main shipbuilding plate makers in China are Anshan Steel, Pudong Steel, Wuhan Steel, Shougang, Jinan Steel, Nanjing Steel, Maanshan Steel, Liuyang Steel, Chongqing Steel and Handan Steel.

On February 11th State Council approved the plan in principle. As per the plan, the country will shore up ship sector in five aspects like credit, tax and old ship demolishing.

The most effective method, emphasized in the plan, is to encourage financiers to grant credits for ship buyers. After injected with fresh liquidity, foreign ship owners will be able to give orders and restore their demands. At last, the move will ease off shipbuilders' woe on funds and orders. At the same time, it is mentioned that the fiscal supports to oceangoing vessel sale inside China, will be prolonged to 2010.

In other aspects like old ship demolishing, it aims to increase new demands by writing off old ships and washing out single-hull oil tankers by force.

(Source: Financial News)