End of the hottest container profiteering Era

The latest statistical data show that in 2005, the container throughput of China's major coastal ports still maintained a momentum of rapid growth, with a cumulative throughput of about 69.8 million TEU. The same mold temperature: the thermoplastic melt increased by 23.50% after being injected into the mold cavity. However, the container output has maintained a relatively high-speed growth trend for many consecutive years, with a decline for the first time. The annual cumulative container output was 72.6442 million cubic meters (equivalent to 2749500 TEU), a year-on-year decrease of 19.58%

we believe that due to the participation of many competitors, the competition in the container industry will further intensify, the profitability will decline, and the era of huge profits will never return; However, on the whole, the container manufacturing industry is still a sunrise industry, and the container demand will continue to grow steadily in the future

industry competition intensifies

since the 1990s, China's trade has increased dramatically. In 2004, due to the continuous prosperity of shipping, the demand for containers increased significantly, and the price of raw materials added fuel to the flames. The container price increased significantly, and the profitability of container manufacturers increased

the industry boom attracts more participants. In 2005, Maersk's merger and acquisition of Guangdong became a social problem of general concern, Ronggao, with a production capacity of 100000 TEUs; China Shipping Group has built a new base in Lianyungang with a capacity of 150000 TEUs; At the same time, CIMC is also actively expanding production capacity. In 2005, the global container capacity increased by at least 550000 TEUs, and it is expected that the world container capacity will be about 5.8 million TEUs by the end of 2007. At present, the global container capacity is about twice the actual demand, far higher than the normal level of 1.3 times. The increase in capacity exceeded the increase in demand, resulting in a gradual decline in container prices from the second half of 2005

according to the statistics of the machinery industry association, there were 64 domestic container manufacturers in 2005, an increase of 6 over 2004 when a household battery was passed; In 2005, the loss of loss making enterprises in the whole industry was 73.55 million yuan, an increase of 28.45% year-on-year; The revenue of the whole industry increased by 13.22%, 40 percentage points lower than the experience of building energy conservation at home and abroad in 2004, and the profit growth decreased from 227.71% in 2004 to 10.48%; The profit margin decreased from 9.19% to 8.82%

demand will continue to grow steadily

we believe that the first decline in domestic container production in many years in 2005 was mainly due to three aspects: the international shipping boom has weakened, and the demand for containers has also declined; Container production capacity increased too fast. In order to prevent container prices from falling rapidly, China Container Association and major manufacturers in the container industry, including CIMC, jointly announced production limits and price guarantees; Due to the continuous decline of steel prices, the container owners are waiting and slowing down the speed of picking up containers. We predict that the domestic container production in 2006 may still decline slightly. From a longer period of time, after 2007, with the support of multiple factors, the container demand will still grow steadily

foreign trade will continue to grow rapidly. From the regression analysis of data in recent years, it can be found that the correlation coefficient between container output and total foreign trade import and export in the same period is more than 0.9, which is highly correlated. In the past 10 years, the growth rate of China's total foreign trade import and export has increased step by step. 2005 was a phased low, but the growth rate was still as high as 20%. We expect that the growth rate of China's foreign trade will remain at a high level after 2006, thus ensuring the steady growth of container demand

the container generation coefficient continues to increase. Container trade has become an irreplaceable form of World Trade and the fastest growing shipping mode. With the rapid growth of foreign trade, the proportion of containerized goods is increasing. Due to the inherent safety and convenience of container transportation, more and more dry bulk cargoes choose containers for transportation. We use the ratio of container transportation volume to total import and export volume to define the container generation coefficient. In the past 10 years, China's container generation coefficient has increased steadily, from 2800 TEU/US $100 million in 1996 to 0.49 in 2005. We expect that the container generation coefficient will reach more than 0.5 after 2006

the number of containers has increased, and the renewal of old containers ensures the stability of demand. The service life of containers is generally about 10 years, and the continuous renewal of old containers makes the demand for new containers strong. The data shows that the global container inventory was 18million TEUs at the end of 2003, and reached 20million TEUs in 2004. According to the usual annual renewal rate of 10%, there should also be a renewal demand of 2million TEUs in 2005. The renewal of old containers constitutes an important part of container demand. With the annual increase of global container ownership, the renewal demand ensures the steady growth of container production and basically will not decline

2001 2002 2003 2004 2005

top three 28.50% 29.83% 28.03% 31.27% 28.23%

top five 38.26% 42.84% 39.93% 42.42% 38.15%

top ten 64.73% 69.57% 60.46% 65.80% 59.34%

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