ANALYSIS-Credit Crunch Hurting Global Shipyard Orders

By Nick Carey

CHICAGO (Reuters) - 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.

"Around 70 percent to 75 percent of the order book is not yet financed and it's going to be a challenge for some operators to obtain financing," said Akis Tsirigakis, chief executive of Athens, Greece-based Star Bulk Carriers Corp (SBLK.O: Quote, Profile, Research), a dry bulk operator with a fleet of nine ships.

In late February an executive at Dalian Shipbuilding Industry Ltd, China's No. 1 shipyard, warned of slowing orders for new ships, citing fears a U.S. slowdown could damp global trade.

Shares of shipyards have suffered. Hong Kong-based Guangzhou Shipyard (600685.SS: Quote, Profile, Research) has fallen 38 percent in the last three months, while Yangzijiang Shipbuilding (YAZG.SI: Quote, Profile, Research) is down about 55 percent over the same period. JES International (JSIH.SI: Quote, Profile, Research), 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 (JINS.OL: Quote, Profile, Research) 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.