Ship orders plunged 90% in Oct

In the first 9 months of 2008, orders dropped 27% to 142.9 mn deadweight tonnes.

Global ship orders tumbled 90 per cent last month as the credit crunch damped world trade and made it harder for shipping lines to borrow money, according to Lloyd’s Registers Group.

Shipowners ordered a total of 37 container ships, tankers and other vessels in October, compared with 378 a year earlier, Lloyd’s Register Chief Executive Officer Richard Sadler said in an interview on Thursday at a conference in Dalian, China.

Hyundai Heavy Industries Co, the world’s largest shipyard, has also reported declining orders for the three months through September as shipping lines are slowing expansion plans because of a lack of financing and plunging demand for shipments of oil, raw materials and finished goods.

The global full-year order tally will likely fall more than the 15 per cent previously predicted by Lloyd’s Register, Sadler said.

“We underestimated it,” he added. “On the positive side, compared to 2006, 2007 was an exceptional year.”

Contracts last year surged 50 per cent to 261.3 million deadweight tonnes, according to Clarkson Plc, the world's largest shipbroker. In the first nine months of this year, orders dropped 27 per cent to 142.9 million deadweight tonnes.

The slowdown means that some shipyards haven't taken an order since the first week of September, Sadler said.

New contracts in China dropped 62 per cent to 24.35 million gross tonnes in the first ten months, he added. New orders in Korea fell 50 per cent to 33.68 million gross tonnes.

Ship orders surged last year as China’s economic growth boosted demand for imports of iron ore, used to make steel. The country’s export growth also fueled demand for container ships to carry furniture, toys and other goods to the US and Europe.

The Baltic Dry Index, a measure of commodity-shipping costs, surged to a record 11,793 on May 20, having more than tripled in three years.

Rates have since tumbled 93 per cent, to near six- year lows, as traders are struggling to get credit for shipments. Chinese steelmakers are also curbing production amid slowing demand for new buildings and cars.