Shipbuilding orders will fall by 60% next year and newbuild prices will drop by 30% from their peak by 2010.
Shipbuilding orders will fall by 60% next year and newbuild prices will drop by 30% from their peak by 2010, according to Bao Zhangjing, chief researcher at China Shipbuilding Economy Research Center (CSRC) in Beijing.
Speaking at the Asia Ship Finance and Leasing Forum in Shanghai, Bao said that ?owners will not order as long as they believe prices will fall further, though yards have no immediate need to cut prices, having a two to three year orderbook and are adopting a "wait and see" approach?.
He predicted that newbuilding orders, which have already fallen sharply, from 14m dwt in August to less than 1m dwt in November, will drop by 60% in 2009 from the 2008 total of about 150m dwt.
There will be a further fall in 2010 to less than 50m dwt.
A modest recovery will appear in 2011 as yards start to seek to fill spare capacity from 2012, but it will be 2012 before new orders return to 100m dwt, Bao suggested.
These forecasts are derived from CSRC"s own economic model. They are based on an estimated cancellation rate for current orders of 20-30%. But Bao admitted that estimating actual cancellations is ?a matter of judgment? because shipyards ?will not say the correct numbers?.
The chief researcher commented that ?major shipbuilding groups in China have the experience to take appropriate action to mitigate the slowdown?.
Of new shipyards in China, he said: ?Some are very capable but some greenfield yards have orders and poor performance so some yards will be phased out.?
He confirmed that Chinese Government policy is now focusing on quality and trying to avoid previous mistakes, by imposing tougher entry barriers for new shipyards. ?But there is a good opportunity for capable yards as the restructuring process creates new competitive dynamics.?