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.