Greater ChinaShipyards

Shipbuilding output at least 30% above underlying demand: Stopford

News today that Beijing is looking to slimline its shipbuilding capacity further has been welcomed by one of the world’s foremost shipbuilding experts, Dr Martin Stopford, but more will need to be cut back, he warns in an exclusive interview with Splash.

Beijing today announced plans to make it harder to be on the nation’s approved white list of yards – those on the list are entitled to easier access to financing. This white list has been the Chinese government’s way of cutting back on shipbuilding capacity. At its peak, China had more than 3,000 yards six years ago.

Stopford, president of Clarksons Research, argued today that more yards will need to be shuttered across East Asia.

“Shipbuilding output of around 103m dwt in 2016 is at least 30% above the underlying demand for new ships,” he pointed out.

With China’s imports hardly growing; the world economy in a trough; and the offshore market in deep trouble, Stopford said current output could only be sustained by “heroic price cutting”.

“Cutting capacity makes sense,” he added, “but with the market split 37% China, 35% South Korea and 19% Japan it’s a game of chicken for who cuts first and most.”

Stopford also questioned whether the cuts are in capacity or prices.

“Don’t rule out some big price cuts,” he told Splash.

 

Tags

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.

Comments

  1. All very true, Martin, but as you know better than most, shipbuilding capacity is determined not by economics but by politics – shipyards and their associated clusters represent concentrations of people who (in Korea and Japan) vote, and who (in China) can express their dissatisfaction in other ways. Watch this space for more subsidies. Its the tragedy of the commons, again.

Back to top button
Close
Close