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CSSC’s Shanghai Waigaoqiao, Chengxi Shipyard face work stoppages

CSSC’s Shanghai Waigaoqiao, Chengxi Shipyard face work stoppages
Shanghai Waigaoqiao Shipbuilding (SWS) and Chengxi Shipyard, both subsidiaries of China State Shipbuilding Corp (CSSC), are facing threats of a cessation of operations due to a severe lack of work, their parent firm has warned.

The oversupply of yard facilities, low newbuilding prices and slowing new orders have created immense pressure on shipyards, and the market has worsened beyond expectations, according to CSSC.

“At present, SWS and Chengxi are facing the risks of insufficient work, leading to an almost certain loss of production moving forward,” CSSC stated in its latest half-yearly financial statement.

CSSC is itself struggling as it posted a 90.1% plunge in first half profit to RMB17.09m ($2.56m) from RMB171.7m in the same period of 2015. The shipbuilder also warned of further decline in profit or a loss for the first nine months of 2016.

First half revenue went down by 17.2% year-on-year to RMB11.8bn.

CSSC’s bottomline was hit as its subsidiary yards SWS and Chengxi’s Guangzhou facility registered operating losses of RMB39.83m and RMB75.86m, respectively, during the first six months.

Chengxi Shipyard, which builds mainly dry bulk carriers, has been hit particularly hard as the bulk shipping sector struggles with a prolonged tonnage glut and new orders have virtually dried up.

SWS, on the other hand, has a more diversified portfolio of constructing bulkers, containerships and tankers, but the yard is not spared from the overall downturn of the shipping industry.