JAPANESE NEWBUILDING RATE FALLS IN JANUARY, BUT CANCELLATIONS STILL LOW

JAPANESE NEWBUILDING RATE FALLS IN JANUARY, BUT CANCELLATIONS STILL LOW



February 23 -- Bloomberg reports that shipyards in Japan, the world's third-largest shipbuilding nation, reported 69 percent fewer orders in January and forecast a third year of declines in 2009 as a global recession slashes demand for new vessels.



Orders were received for 193,700 compensated gross tons last month, the Japan Ship Exporters Association said today in an e- mailed statement. The yards, including Mitsubishi Heavy Industries Ltd. and Mitsui Engineering & Shipbuilding Co., had orders for 625,823 million tons a year earlier. The deepening financial crisis has dried up funds and global demand for commodities, prompting owners and operators of vessels to hold back purchases. The Baltic Dry Index, a benchmark of demand for shipping dry goods, fell 75 percent in the past year. "The serious global economic recession has slowed marine transportation," Masamoto Tazaki, chairman of the 20-member Shipbuilders' Association of Japan, said today at a press conference in Tokyo. "The industry will have to be ready for sluggish orders for new ships." There have been no reports of vessel order cancellations at Japanese shipyards even as the number of contracts falls, he said.



Japanese yards will seek a drop in steel plate prices for contracts starting April 1 as demand for the metal falls from carmakers and machinery companies and prices decline for steelmaking commodities such as coking coal. "It's natural that steel prices should go down substantially, as prices of the raw materials are declining," Tazaki said. Japanese steelmakers want a 67 percent cut in the annual contract price for coking coal because of a slump in global demand for the alloy, Macquarie Group Ltd. analysts said in a report yesterday. Compensated gross ton is an industry measure of ship size, the time required and materials used in production.