Jack-up demand spurs hope for Singapore shipbuilders

But jack-up recovery has yet to kick in.

The improving demand for jack-up is fueling hopes of an improvement for Singapore shipbuilders.

According to UOB Kay Hian, recent reports have flagged a recovery for shallow water demand, indicated by rising jack-up utilisation numbers.

"The improving conditions are boosting sentiments of a recovery that will see alleviation of concerns on unsold rig inventories at shipyards, and the potential for a gradual order demand recovery," the brokerage firm said.

However, UOB Kay Hian noted that this recovery could likely fall only in the midterm. Citing Bassoe Offshore, the brokerage firm said the demand for harsh-environment, high spec semis is likely to pick up in the near term, given that the segment sees little oversupply and clients’ demand for harsh environment development projects.

"Jack-ups are likely to see recovery kick in later, with demand for premium and high-spec models to lead the recovery. While signs are picking up, the downturn remains 'protracted, phased and challenging', quoting ENSCO in their 1Q17 results," UOB Kay Hian said.