Overcapacity to haunt Chinese yards for coming five years

Overcapacity to haunt Chinese yards for coming five years

Chinese shipyards, enduring their toughest year in a generation, must prepare for more contraction in the coming years, warned Huai Jinpeng, the nation’s vice minister for industry and information technology at the Senior Maritime Forum in Shanghai today. The forum is the conference attached to Marintec China, Asia’s largest shipping event, which kicked off today.

“Oversupply will dominate the market,” Huai warned. There’s likely to be insufficient demand in the coming five years, the politician said, predicting between 80m to 90m dwt of new orders through to 2020.

“China’s shipbuilding industry is in slowdown … and needs restructuring,” Huai told delegates. He said there was a need to improve management, technology and supply chain management at China’s yards. The shipbuilding sector, Huai said, “is entering a critical period for restructuring.”

China’s contracting shipbuilding capacity forms the cover story of the latest issue of SinoShip magazine, which is being widely distributed at this week’s Marintec China.

In the two years since the last edition of Marintec China China’s shipbuilding scene has contracted dramatically, down from more than 1,500 yards to less than 100 actually taking orders. Splash anticipates that figure to fall still further to the point where a more mature shipbuilding nation emerges like in neighbouring South Korea and Japan where essentially there are around 10 big merged yards per country.

Ren Yuanlin, executive chairman of Yangzijiang Shipbuilding, said earlier this year he felt there was no need for more than 30 shipbuilders with yard facilities not exceeding 60m dwt.

In the first nine months of 2015, Chinese shipyards received newbuilding orders totalling 18.16m dwt, a fall of 65.4% compared to the same period of 2014, according to figures from the China Association of the National Shipbuilding Industry (CANSI).

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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