Credit crunch hurting global shipyard orders

There are growing signs the credit crunch that began with the U.S. housing market is spreading to the world's shipyards.

A roaring global economy saw shipbuilders inundated in recent years by orders for container ships, oil tankers and bulk carriers to satisfy American and European demand for consumer goods, a global thirst for oil and a Chinese hunger for commodities. Order books swelled to a three-year backlog, but the credit crunch is making it harder for some shippers to raise money to pay for the ships they ordered. Shares of shipyards have suffered. Hong Kong-based Guangzhou Shipyard has fallen 38 percent in the last three months, while Yangzijiang Shipbuilding is down about 55 percent over the same period. JES International , which debuted on the Singapore Exchange in December, is down 64 percent since the beginning of the year. Among recent ship order cancellations, Hong Kong-based shipper Jinhui said in January it was calling off construction of two giant ore carriers, citing global credit conditions. "The risk-return profile of completing (the vessels) has changed drastically due to persistent negative sentiment clouding the global financial markets," the company said. According to some shippers, any deal over $500 million that requires a syndicated loan is more likely to run aground.

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