The shipbuilding sector has been bogged down by excessive shipyard capacity amid the ongoing vessel tonnage glut, leading to low newbuilding prices and reduced orders, not to mention the widespread bankruptcy of many bottom-rung yards.
Tan Naifen, deputy director of Cansi, said that the number of vessels to be delivered from Chinese yards would decrease significantly in 2014 and 2015 as the sector consolidates, an outcome that would alleviate the global vessel tonnage glut that has been stripping away profit for shipowners.
And as China’s shipbuilding sector consolidates, Tan noted that the yards have been raking in profits in the first two months of 2014, with 87 of the country’s stronger yards generating revenue of RMB30.8bn ($4.9bn), up 10.8% year-on-year and profit of RMB480m, skyrocketing 123.3%.
While Tan believed that the recovery process has started, she did not give a forecast on when the shipbuilding sector will witness a boom again.
The resolve by Beijing to revive the shipbuilding sector has been the driving force for an optimistic outlook, as China’s State Council has banned shipbuilders adding new yard capacity and is incentivising owners to scrap old vessels.
Meanwhile, deputy minister of China’s ministry of industry and information technology Su Bo believed that China will become the world’s strongest shipbuilding nation within the next 20 years.
“In the next 10 to 20 years, China will become the world’s most important and leading shipbuilding nation as the country continues to transform and enlarge its maritime sector,” Su was reported saying.
“China is already the world’s second largest economy, and its shipbuilding sector is expected to raise its standards to meet international demands. The shipbuilding industry is also expected to spearhead the growth of China’s maritime sector,” he added.
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