Guangzhou Shipyard International (GSI)'s General Manager Han Guang-De prospected that global shipbuilding industries would have the restructuring period in the next 2-3 years, on June 8 at its shareholders' meeting.
He said, newbuilding demand stands at 80m dwt at present, while shipyards' capacity reaches almost 200m dwt. Recent overcapacity and overtonnage problem have caused depression in overall shipbuilding industries - decrease in newbuilding price by over 40%, comparing to the highest point, and by 5-15% from last year.
According to recent statistical data by China Association of the National Shipbuilding Industry (CANSI), China's newbuilding delivery, in the first four months this year, stood at 15.65m dwt, down by 16.8%, year on year, while new order plummeted by 45.9% to 7.37m dwt. At the end of April, Chinese shipyards' kept 139.24-dwt order on the book, down by 26.1% on previous year and by 7.1% on the end of 2011.
Han said that GSI's total margin has currently dropped to 2% from its highest 20%, which represents that Chinese shipyards are not likely to make profits, even they contract newbuildings.
He pointed out that Korea is as competitive as China, for instance, GSI's newbuilding price of MR tanker, valued at around $30m, shows not much of a difference from that of Koreans, about mid-$30m.
However, until lately, GSI's offer price for MR PCs had reached $50m apiece. Due to strong yuan, etc., the price has almost cut in half and profits from newbuilding is nearly 'zero', Han says.
He thought that recent slump and exacerbated market would last in the next 2-3 years.
Meanwhile, at the end of 2011, GSI held 42 newbuildings of a cumulative 1.73m dwt on the book. Although it has no official contract signed so far this year, GSI is working hard to meet its yearly target of 15 newbuildings contracted, 23 completed construction, 18 started construction and 21 launched, Han said.