China’s shipbuilding industry is expected to be left with a handful of 30 shipbuilding enterprises with demand for yard facilities not exceeding 60m dwt by end-2015, according to Ren Yuanlin, executive chairman of Yangzijiang Shipbuilding.
Ren, who was speaking to the local media, said that such a demand level spread among 30 shipbuilders is a “reasonable projection”, or even a “conservative estimate”.
At its peak, China’s shipbuilding sector witnessed more than 3,000 shipyards at the start of 2010, leading to a severe yard capacity glut and sending thousands of yards out of business as newbuilding orders plunged.
In the first nine months of 2015, Chinese shipyards received newbuilding orders with tonnage amounting to 18.16m dwt, a fall of 65.4% compared to the same period of 2014, according to figures from China Association of the National Shipbuilding Industry (Cansi).
Today, there are less than 100 yards, including state-owned enterprises, with active day-today operations, Ren noted.
He also pointed out that China’s shipbuilding industry is going through its worse five-year period based on Beijing’s 12th Five-Year Plan (2011-2015), the blueprint for long term social and economic development policies.
The big state-owned shipbuilders, namely China State Shipbuilding Corp (CSSC) and China Shipbuilding Industry Corp (CSIC), will likely survive the industry recession with financial backing from government.
Among the privately-owned yards, Yangzijiang has come out tops for making the right turns and decisions amid the crisis, thanks to its shrewd leader Ren. Sinopacific Shipbuilding Group, known for its inhouse designed bulkers and OSVs, ran into cash flow problems after the crash of oil prices and the prolonged dry bulk shipping slump, impacting its newbuilding sales.
Another once-leading privately-owned yard China Huarong Energy Company, previously and better known as China Rongsheng Heavy Industries, continues to struggle with debts and ongoing talks with its creditors. The shipbuilder with huge yard facilities is now literally a ‘ghost yard’, where operations have ceased as funds dried up.
At last count over the course of this year, close to 10 privately-owned Chinese yards spread across the provinces of Jiangsu, Zhejiang, Liaoning and Shandong have either filed for restructuring or declared bankrupt.
“China’s shipbuilding industry is going through a major reshuffling and a painful phase of consolidation, but it is also gaining strength during this critical period,” Ren was quoted saying.
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