Singapore offshore vessel builders becoming 'sandwiched' in yard competition

Analysts think they're getting trapped.

According to CIMB, financing and cheaper costs have resulted in an influx of international OSV orders to Chinese yards. 

CIMB believes that Chinese yards have risen to the fore and are seen as credible, especially in the low-mid end. Singapore OSV builders are a sandwiched class, trapped between the differentiated, higher-end European yards and the cost-competitive, lower-end Chinese yards.

Here's more from CIMB:

Almost brought to its knees by the high-end shipbuilding orders it secured back in 2008, Otto Marine (OTML SP, Not Rated) has learnt its lesson and shifted its focus to vessel chartering.

Meanwhile, Nam Cheong has cleverly leveraged the Chinese yards as it outsourced some 75% of its orders.

We do not doubt that Singapore can preserve its market share in the rig market but that alone might not be a strong reason for outperformance. In 2H13, Keppel singlehandedly dominated with about 50% of the 23 jack-up rigs ordered globally; the other 50% was clinched by various Chinese yards.

Speedy delivery while preserving profitability is their key competitive advantage over the attractive payment terms offered by the Chinese and cut-throat pricing by the Koreans.

Additionally, Singapore yards have delivered the perfect riposte by snatching the Transocean drillship orders from right under the Koreans’ noses.