Slowdown Signs - 2010 to be Most Risky Year for China Shipbuilders

BEIJING, May 15 -- According to Ms Bao Zhangjing chief-analyst of China Ship Industrial & Economical Research Center expresses her prediction that "2010 will be the hardest year for Chinese shipbuilder since the most problems will show up during the period."

    During 2010, ship-owners are expected to be exacting towards their ships made-in-China in view of shrinking shipping market and slumping shipbuilding material prices, sparking more and more business conflicts, weighing on shipbuilder's operation.

    According to Ms Bao the existing orders can ensure high utilization rate in shipbuilding capacity during 2009-2010, then, heavy pressure will be felt in 2011's production as those orders are gradually completed.

    Statistics show that key ship yards basically have full production plans for 3 year. And, the orders held by China State Shipbuilding Corp and China Shipbuilding Industry Corp, respectively posted at 51.97 million DWT and 33.39 million DWT the orders held in Jiangsu and Zhejiang respectively at 76.21 DWT and 25.53 DWT. But, the downturn in new ship orders becomes more obvious. COSCO isn't likely to add new ships since its existing ships are capable to meet the present business. In 2008, COSCO eyed its gross profit fall down 41.8%YoY.

    It's said in CNASI statistics that new ship orders showed direct decline since last Q4, when new orders concluded at 2.61 million DWT fewer than 5% of the whole year's volume. In Q1, key shipbuilders signed orders of only 0.44 DWT down by 95.6%YoY.

    Ms Bao is quoted as saying by China Industry Economy News that Shipbuilders are suggested to adopt different altitudes to deal with the possible order cancellations. She said that "As to venomous behaviors, shipbuilder should resort to laws. But, shipbuilders should give helps to ship-owners, unable to afford the expenditure, to continue their businesses.”

    Ms Bao warns ship industry is hard to walk out of the crisis if recovering demands can't cover shipbuilding capacity in the future. And the recovering demands have to reach over 140 million DWT per year, according to the primary estimation, which is able to help out ship industry and push it into the bloom.

    (Source: China Industry & Economy News)