Global shipbuilding overcapacity is currently exceeding over 50% and an utilization rate of China’s production in shipyards turns out to reach only 75%.  

Under this circumstance, the State Council of China proclaimed related policies last week and threw itself into the shipbuilding restructuring and solving overcapacity matter, reported by a local press.

With releasing “Guidance of problem solving for serious industrial oversupply”, China suggested development measures for restructuring of shipbuilding and allied industries, promoting facility development contract and high value-added industry.

Li Dong from the Ministry of Industry and Information Technology of China said on October 17 at a meeting arranged to release solution plans for overcapacity that the government plans to strictly control shipbuilding, repair and offshore facility infrastructure with suppressing unconditional investment. Also, China will move shipbuilding capability to offshore facility sector with kicking out a considerable number of yards which have inked speculative orders.

Li added that shipbuilding industry’s overcapacity problem is also a global issue, pointing out that global shipbuilding capability is 200m dwt at present and new contracts in 2012 reached 46.86m dwt while 83.96m dwt orders were inked in this year to September. Although new orders started to show a recovery status, a boom period like 2007 is difficult to see over a couple of coming years, he added.

According to forecasts suggested by industry professionals, global new order demand will be around 70m-90m dwt yearly over the next three years with global overcapacity surpassing 50%.

China’s productive capability corresponds to 40% of the global figure while Korea and Japan account for 35% and 25%, respectively. The productive capability secured by China was 80m dwt till the end of 2011 with a 75% utilization rate.