Singapore shipyards in dire straits

SINGAPORE (Aug 11): UOB Kay Hian is downgrading Singapore shipyards to “underweight” as orders are put on hold, aborted or delayed amid the low oil price environment.

In a note on Thursday, analyst Foo Zhiwei notes that orders for floating production system (FPS) have fallen below the eight-year average of 1.5 units per month. Only two FPS orders were recorded for the year to July, which translates to 0.6 unit per month for 3Q2016.

On top of that, fewer of the planned FPS orders are reaching the final bidding stages, as low oil prices have made it “difficult for companies to sanction projects”, says Foo. Only 21% of the 241 planned FPS projects globally made it to the bidding and final stages, while 142 are in the planning stage and 49 in the appraisal stage. At its peak, 31% of planned projects made it to the final stage.

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