Chinese market player said, regarding recently troubled Chinese shipbuilders, 2012 would be the toughest year, when considering 3-4 year construction cycle for large vessel. Added that only by 2015, market would start recovering.
The China Association of National Shipbuilding Industry (CANSI) said that Chinese builders apparently slowed down in Q4 2011, however, related economic index still showed two-digit growth.
However, it pointed out that plummeting orderbook by decreasing new order was cornering Chinese yards into crisis.
According to statistical data from CANSI, about 50% of the investigated yards had no new order during the first half of 2011 and 10 among a total of 43 major builders won no newbuilding contract. Therefore, many builders went into the red.
Ministry of Industry & Information Technology (MIIT) said that a total of six factors affect its domestic yards, including Chinese and global economic uncertainties, lack of global demand, tougher competition among shipbuilders, new international regulations about shipbuilding industry, increasing construction cost and labor cost, insufficient cost competitiveness pressured by stronger yuan and inflation.
Moreover, oversupply is also one of the serious problems. Spokesman from MIIT warned that China reached 66m dwt of shipbuilding capacity as of 2009, while demand just stood at 50m dwt, about 16m-dwt being over-supplied.
In terms of numerical result, oversupply is a serious problem, however, only parts of commercial ships face oversupply. Chinese builders see high-value sector under-supplied and this arena would be the key to resolving current crisis.
Amid big crisis in the market, some major yards in China still made a good record last year. Jiangsu Yangzijiang Shipbuilding sealed new order for 25 10,000-teu next-generation eco-friendly boxships, the largest order in China. Also, Jiansu Rongsheng Heavy Industries inked about $1.3bn of newbuildings just in H1 2011, up by 30% on the same period 2010.
Market player forecast that shipbuilding market would have a clear change in supply-and-demand structure. LNG carrier and offshore market would grow even more and eco-friendly vessel would be welcomed by owners.