Current indicators suggest the pressure on Chinese shipbuilders may outlast Trump’s presidency
Yangzijiang Shipbuilding’s share price has taken a significant hit—down nearly 30 per cent—since the US unveiled a proposal in February to impose steep fees on Chinese-built or Chinese-operated ships, as well as liners that have Chinese vessels on order, entering American ports.
The counter, listed on the Singapore Exchange under the ticker BS6, had peaked at a 52-week high of S$3.30 on Feb 20, after rallying from S$1.70 since May 2024. That momentum quickly reversed following the US announcement.
Under the proposed rules, Chinese-owned ships could face port entrance fees of up to US$1 million, while non-Chinese carriers operating Chinese-built vessels would be charged up to US$1.5 million per port entry. The levy scales down based on the proportion of Chinese-built ships in a carrier’s fleet—from US$1 million (for over 50 per cent Chinese-built) to US$500,000 (for under 25 per cent).
These measures stem from a broader investigation into China’s dominance in the global shipbuilding industry, which now accounts for over 50 per cent of global tonnage—up from just 5 per cent in 1999.
Despite the market’s knee-jerk reaction, Yangzijiang’s management told analysts shortly after the US proposal that no orders had been cancelled or delayed. However, the company declined to provide further updates to The Business Times on any changes to orders or strategic responses to the proposed levies.
Market watchers remain divided. DBS Equity Research has kept its S$3.80 target price on the stock, calling the recent sell-off “unwarranted” and partly driven by profit-taking. DBS views the correction as a buying opportunity, highlighting that shipyards are fully booked for the next three years—giving the industry time to adjust to policy shifts.
“Shipbuilding capacity remains tight,” DBS noted, pointing to global fleet renewal, the energy transition, and rising demand for defence vessels. “It’s difficult to find yard space outside China, the world’s largest shipbuilder.”
Other brokers have echoed the “buy” call but caution that volatility may persist in the short term. On Tuesday, Yangzijiang’s stock fell another 2.1 per cent to S$2.32, making it the third-worst performer on the Straits Times Index, which dipped just 0.1 per cent.
UOB Kay Hian, in a Feb 28 report, said the proposed port fees could translate to about US$100 per container—an amount that could likely be passed on to shippers. DBS added that the impact remains difficult to quantify, as carriers are expected to absorb or pass through the added costs.
Meanwhile, Chinese shipbuilders and operators are exploring countermeasures—ranging from route shifts to forming alliances and diversifying production bases outside China. However, rebuilding shipbuilding supply chains is no small feat, given the need for competitive steel access and skilled labour.
Yangzijiang’s management acknowledged that South Korean shipyards, with earlier delivery slots and attractive pricing, could lure some customers in the near term.
This trend fits into a broader “China plus N” strategy, reflecting a more pronounced global shift to diversify supply chains amid escalating US-China trade tensions.
Crucially, the port fees were not introduced by President Donald Trump—they were drafted before his return to office in January. This signals bipartisan consensus in the US on reducing reliance on Chinese shipbuilding.
If carriers are forced to raise freight rates to cover the port levies, switching to non-Chinese-built vessels could yield similar cost outcomes—while steering clear of US scrutiny. This could reshape long-term order books.
In short, the challenges facing Chinese shipbuilders like Yangzijiang may not fade with political cycles. Shipowners, carriers, and investors would do well to prepare for a prolonged adjustment period.
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