China’s state-owned yards regain dominance not seen since before the global financial crisis

New analysis from Clarkson Research shows how China’s state-owned shipyards have emerged as the survivors in the near decade-long shipbuilding downturn that has decimated much of the sector across East Asia.

State-backed yards accounted for 40% of the active yards in China as of the start of April 2018, the highest share since 2000, and up from 13% at the start of 2009, data from UK-based Clarkson Research shows.

Although total ordering at Chinese yards has declined, state-backed yards have increased their share of contracts, accounting for 59% (255 units of 6.3m cgt) of the total in 2017 in cgt terms, up from 31% in 2009. This increase has been supported by orders from state related interests. In contrast, the share of contracts at independent yards declined from 50% in 2009 to 31% (177 units of 3.4m cgt) in 2017.

Meanwhile, consolidation among independent yards has increased. In 2017 two yards, Jiangsu New Yangzijiang and New Times, accounted for 70% of cgt ordered at independent yards, down from over 30 yards in 2009.

Since the start of 2009, the number of active yards (with at least one vessel 1,000+ gt on order) in China has fallen from 391 to reach 112 at the start of April 2018, its lowest level since 2003.

“This has been the sharpest decline in yard numbers among the ‘big 3’ builder countries, with the number of active yards in Korea and Japan down from 39 to 14 and 70 to 55 respectively in the same period,” Clarkson Research noted in a recent report.

“With the orderbook at independent yards declining rapidly, the prominence of state-backed yards appears to have returned to levels last seen before the financial crisis,” Clarkson Research concluded.