th24 JECKU Top Executive Meeting

24th JECKU Top Executive Meeting
5th November 2015, Zhongshan China
Chairman’s Note1

The 24th JECKU Top Executive Meeting was held on 4th-6th November, 2015 inZhongshan. 123 delegates participated from five shipbuilding regions including Japan,Europe, China, Korea and US.
2The meeting covered the world economy, regional shipbuilding situations,shipbuilding markets by ship type, shipbuilding supply and demand, and shipbuilding
costs. Additionally, the impacts of oil price, the exchange rate and some other factors on
the shipbuilding industry of each region were discussed.
3Regarding the global economy, it is recovering slowly, while the growth of each ofeconomic entities is quite different. Specifically, the recovery of the US economy isstable and interest rates may rise in future. For Europe, the euro zone will continue toapply the QE policy which is likely to have a positive impact on its recovery. Japan will
emerge from deflation and will maintain QE policy. The GDP of China is likely to keepincreasing in a medium or high speed, although facing the downward pressure. In thepast year, the exchange rates fluctuated significantly. The US dollars kept strong, Euro,YEN and WON devalued, and CNY was steady against the US dollar. The global trade
growth was slow and the global shipping industry is still in a tough situation. The
participants shared the view that recovery period for the shipbuilding industry will belonger than estimated in the past.
4The latest shipbuilding situations were presented respectively by regions. The

orderbook of Japanese shipyards has been increasing continuously, and tankers havetaken a greater shares of the newbuilding contracts. The value of the European
orderbook has increased slightly, 60% of which was made up of passenger ships. The
completion of Chinese shipyards is still steady, although the newbuilding contracts
declined dramatically this year. The delivery of Korean shipyards decreased and neworder by ship type have changed with diversification. LNG powered ship may be a future
trend of the global shipping development. The world’s first LNG powered containership1

th24 JECKU Top Executive Meeting

built by a US shipyard was delivered in October. The emission regulations will continue
to play a key role in new vessel designs. The US is scheduled to begin exporting LNG
by end of the year and the crude oil export ban may be lifted.
5The shipbuilding market for different ship types has also been reviewed. Due to thedrop of oil price, crude tanker market has been kept active. However, the heavier
delivery next year will bring great pressure to the future market. The bulk carrier market
was depressed due to fleet overcapacity and low freight rates. Containershipnewbuilding delivery above 10,000 TEU has shown considerable growth since 2013
and the maximization trend of the container ship has been obvious. The concerns havealso been expressed that overcapacity may hinder the recovery of the boxship market in2016. Gas price fell due to plunging oil price and LNGC oversupply has led to charter
rate falling and shorter charter periods. The future of the cruise market seems to beoptimistic. Also affected by the fall of oil prices, offshore structure and offshore support
vessel markets significantly declined.
6The delegates have also exchanged views about the global fleet supply, demandand capacity. The global trade growth has been declining since the beginning of thisyear, leaving more uncertainties for future recovery. The high rate of orderbook toexisting fleet combined with fleet overcapacity will have negative impacts on future
shipbuilding demand. The active yards also have the issue of idle building capacity.
Additionally, some capacity for the construction of offshore structures will come back tohaunt shipbuilding.
7The delegates generally shared the view that the world economy will need a longertime to recover. Although the developed countries are acting as the dynamic for the
global economic growth, the emerging and developing economies, especially China andIndia, are making great contributions to the global economic recovery and seaborne
trade. Global shipbuilding industry still needs to further recover. It has been agreed thatall parties should share more information and exchange further constructive opinions inorder to address different formulas to better cope with the challenges.
8The delegates have agreed that the 25th JECKU Top Executive Meeting will be held in

Gyeongju in Autumn 2016.

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