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Good times over for Chinese yards, more defaults loom

Good times over for Chinese yards, more defaults loom

Beijing: Chinese shipbuilders are seeing a rise in defaults on new orders, and face "severe challenges" in the next few years, after a flush 2008 in which profits grew by 50 percent, the Xinhua news agency said on Monday.
China's shipbuilding industry, which is steadily seizing market share from its Asian neighbours, reached a production capacity of 28.81 million deadweight tons (dwt, or 29.5 percent of the world's total, up from 22.9 percent in 2007, Xinhua said, citing data from the Ministry of Industry and Information Technology.
But it has become more difficult for shipbuilders to raise funds due to a sharp decrease in new orders, as well as rising numbers of defaults on new orders, Xinhua said, citing an unnamed ministry official.
Chinese shipbuilders have taken on increasingly complex orders, including liquefied natural gas ships currently under construction near Shanghai.
Chinese yards hold 37.7 percent of the world's total new orders, with a production capacity of 58.18 dwt. Their current orders account for 35.5 percent of the world's total, or a capacity of 204.6 million dwt, ministry data showed.
The official warned that the Chinese shipbuilders could face severe challenges in the coming two or three years, as the global financial crisis begins to take a toll on the sector.
The industry as a whole saw profits grow by 50.5 percent in 2008, to a collective 28.34 billion yuan ($4.14 billion). [03/02/09]

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