China's shipbuilding industry is sinking into a serious slump with major shipbuilders seeing a dramatic fall in new orders in the first half of the year as a result of the stagnant global economy, the country's shipping industry associations and shipbuilders said this week.
"The shipbuilding industry is now hitting the bottom of downturn with a sharp decline in new orders for the first six months of the year, and the situation is unlikely to improve in the very near future," Ye Meng, vice secretary-general of China Shipowner's Association (CSA), told the Global Times.
"The entire industry is experiencing the worst time in a decade and our business is not immune to the industrial slump," said a spokesman with China Rongsheng Heavy Industries Group, who declined to be named.
"We did get new shipbuilding orders of some 300,000 deadweight tonnage in the first half of the year, but it was a dramatic fall from last year when we ranked first in China in terms of new orders for the entire year," the spokesman said.
According to the spokesman, receiving new orders does not necessarily mean good news as the contracted prices have been pushed down too low to make a profit.
China Rongsheng's plight is just the tip of the iceberg. China's shipyards secured contracts for just 182 ships in the first six months of the year, the South China Morning Post reported Tuesday, citing data from London-based market researcher Clarkson Research Services.
In tonnage terms, Chinese shipyards secured deals for 3 million compensated gross tons between January and June, against 32.54 million compensated gross tons at the peak in 2007, the report said.
Data released by the China Association of the National Shipbuilding Industry (CANSI) last month also showed that China's new shipbuilding orders fell more than 47 percent year-on-year during the first five months.
Meanwhile, the average reading of the Baltic Dry Index (BDI), a measure of the cost of shipping dry-bulk commodities, hovered around at 1,100 points in recent weeks, far below the break-even point of 2,000. 
"The profit margin is narrowing due to low prices and as instances of contract defaults rise. Many shipbuilders along the Yangtze River and small private ones went bankrupt," said Ye of CSA.  
About 50 percent of shipbuilding companies in China may go bankrupt in the next two to three years, Securities Daily reported early this month, citing Tan Zuojun, general manager of China State Shipbuilding Corporation.
"The sluggish world economy resulted in sluggish demand and oversupply of ships during peak years also complicated the situation," said Deng Xuanling, vice secretary-general of CANSI.
"To tide over the bad times, we hope the government could cut taxes and allot special funds to support those shipping enterprises which promote technical innovation and develop clean energy vessels," Ye said.