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Crisis rocking the boat

Crisis rocking the boat
Although China's shipbuilding industry reported a gross output value growth and received the most orders in the world in 2009, analysts said it still faces gloomy prospects in the next few years.

Global financial crisis rocking the boat for shipbuilders.

Although China's shipbuilding industry reported a gross output value growth and received the most orders in the world in 2009, analysts said it still faces gloomy prospects in the next few years. Shipbuilding saw a gross output value of 548.4 billion yuan ($80.34 billion) in 2009, a 28.7 percent increase year-on-year, but the growth rate dropped 31.1 percent, according to figures released by the Ministry of Industry and Information Technology (MIIT) Tuesday.

It also said export delivery values rose 17.8 percent to 253.2 billion yuan ($37.09 billion), and the growth rate dropped by 38.2 percent.

China's new orders and orderbooks occupied 61.6 percent and 38.5 percent of the world's total in 2009, up 23.9 and 3 percent compared with 2008, said the MIIT.

"China's new orders and orderbooks surpassed South Korea's to top in the world in 2009, but it still lags behind the main competitors in other aspects such as technology innovation and production efficiency," said Liang Zhiyong, a senior analyst at the China Shipbuilding Economy Research Center (CSERC).
He said the increase in the shipbuilding industry's gross output value is a reflection of the booming market before the global financial crisis, and the growth rate's slowdown indicates a gloomy prospect for the shipbuilding industry in the next few years.

There were 1,859 shipbuilding companies around the country as of November. About 65 percent did not receive new orders in 2009, and 30 percent of orders have been cancelled or delayed due to the economic recession, the China Association of the National Shipbuilding Industry said in a report released January 5.

"These factories are mainly private and small ones based in Zhejiang and Jiangsu provinces," said Liang. "They face difficulties from financing to delivering vessels on time and getting new orders, and some of them will be washed out of the industry in the future."
Zhu Hongren, chief engineer at the MIIT, said at a December conference that China's shipbuilding industry would face "severe" overcapacity problems in 2011.

He said the government would encourage mergers and acquisitions, which it plans to use to create 10 large shipbuilding companies which will account for 70 percent of the market share in terms of overall production capacity.

Analysts from Haitong Securities said in a research report that they are optimistic on the prospects of State-owned China State Shipbuilding Corporation and China Shipbuilding Industry Corporation (CSIC), as well as some large private shipbuilding companies, in the expected industry reshuffle.

Liang from the CSERC expects China's shipbuilding industry will recover in 2013 or 2014. "Normally ship yards wait longer than the world's shipping market for recovery," he said.

www.turkishmaritime.com.tr

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