It is estimated that 24% of the 2011 global newbuilding capacity (63m cgt), or 15m cgt, would disappear from the market for the next three years.
Danish Ship Finance reported, yard capacity has grown too big for future newbuilding demand, which will lead to a restructuring in the end. Added, "The industry is likely to be concentrated on relatively few large owners and shipyard capacity would be adjusted more dramatically."
According to the report, there are big gaps between the four major shipbuilding nations. In South Korea, 23 shipyards account for the estimated 2011 capacity of 18m cgt, while Chinese capacity of 23m cgt was available through 204 yards. In Japan the estimated capacity of 11m cgt for last year was distributed on 57 yards. In Europe, 117 shipyards have an estimated capacity of 7m cgt.
Actual capacity adjustments might be less responsive by government interventions, however, Danish Ship Finance forecast that yard capacity will be scaled back to the 2008-level by 2014.
Therefore, 23.8% of 2011 global capacity, that is, 15m cgt would close down within the next three years. Yards might either scale down capacity or start operating as repair yards or shut down.
Danish Ship Finance says that China and Europe will see the largest adjustments. Large Chinese yards have an abundant order, however, several of the smaller yards are struggling to win new orders with orderbook being exhausted.
It is doubtful that these yards will acquire the skills to build high specification vessels in the near future, therefore, many of them will close down by 2014.
Accordingly, almost 7m cgt, 30% of 2011 capacity in China, will close down within the next three years and in 2014, most of which (4.5m cgt) is expected to close particularly.