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Shipyards mired in troubled waters
By Jiang Wei (China Daily)
Updated: 2009-02-10 08:11

Shipyards mired in troubled waters

Shipyards mired in troubled waters

Struggling Chinese shipbuilders may see a significant fall in orders this year, and expect the anticipated government stimulus plan to help then stay afloat.

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Domestic shipyards are expected to get new orders of only 20 million to 30 million deadweight tons this year, a 48.4 percent to 65.6 percent fall from the 58.18 million deadweight tons last year, the China Association of the National Shipbuilding Industry said in a report.

The international shipbuilding industry has already started feeling the pinch from the global economic downturn since last September. In December, new orders worldwide plunged to only 21 million deadweight tons, down 99.2 percent year-on-year, according to statistics from Clarkson Research Service, an independent consulting firm.

The association warned that China's shipbuilders are set to face high risks in "defaults" this year because shrinking demand for marine transportation has brought about financing problems for ship buyers.

"Defaults and requests to delay deliveries are both increasing. If the market remains gloomy, cancellation of orders and delays in payment will be on the rise this year," it said.

The State Council, or the Cabinet, is working on a stimulus plan for adjusting and promoting the shipbuilding industry, after similar plans for auto, steel and textile industries. The plan is expected to guide shipbuilding firms to effectively protect against risks and help them to maintain stable and rapid development.

Shipyards mired in troubled waters

The overall performance of China's shipbuilding industry was remarkable last year thanks to the growth in the first half. Shipbuilding output reached 28.81 million deadweight tons, an increase of 52.2 percent year-on-year, according to the latest data released by the Ministry of Industry and Information Technology. China's share of the world market has grown from 22.9 percent in 2007 to 29.5 percent last year.

The industry as a whole saw profits grow by 50.5 percent in 2008, to a collective 28.34 billion yuan.

From January to December 2008, large-scale shipbuilding enterprises nationwide contributed a total of 118.3 billion yuan to raise the value of the whole industry, up by 61.2 percent year-on-year, the ministry said.

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