DESPITE news a 50 per cent plus slide in shipbuilding orders, increased shipyard bankruptcy filings and an industry blacklisted by banks, the China Association of the National Shipbuilding Industry (CANSI) remains confident about the future.
"Ocean shipping is still the most cost-effective means of transportation. As long as the sea does not dry up, there will be shipbuilding business", said CANSI chairman Zhang Guangqin.
Statistics show, he conceded in an interview, that from January to July, China took 11.64 million deadweight tonnes in new orders, 50.7 per cent less than one year ago and that the China State Shipbuilding Corporation's profit shrank 63 per cent in the first half.
Mr Zhang said shipbuilding is a typical cyclic industry, and though dark times will persist for a period, it will emerge into profitability one day.
Overcapacity does exist, he said, but shipbuilding capacity changes with demand. Some small and medium shipbuilders have stopped taking new orders since 2009. A number of new yards did not even start production.
Mr Zhang estimated that China's actual shipbuilding capacity is at 70 million tonnes. Major shipbuilders are still holding orders exceeding 100 million tonnes. Shipbuilders are not going to lose their jobs this and next year, so there is no panic, he said.
Two positive factors should be noted, he said. One is that prices of new ships are already more than 50 per cent down from before downturn, which should prompt new orders. There is no more room for price reductions. The second one is that despite the gloomy situation in the shipping market, the ocean engineering market is thriving and shipbuilders can take the opportunity to adjust their product structure.
Mr Zhang also said, besides the effort of the shipyards themselves, support from outside the industry such as the financial sector is also crucial for their survival in the winter of the market.
CANSI is appealing to banks not treat every shipbuilder in the same way as some major enterprises, such as Dalian Shipbuilding Industry Corporation, Jiangnan Shipyard, Rongsheng Heavy Industry and Yangzijiang Shipbuilding, still have competitive advantages.