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Jiangsu issues stop-work order to 23 shipyard projects

Jiangsu issues stop-work order to 23 shipyard projects
The severe shipyard capacity glut in China has prompted the Jiangsu province authority to order a halt to 23 yard facility expansion and conversion projects by various companies.

In a statement issued by the Jiangsu division of China’s National Development and Reform Commission, the 23 projects included construction of new docks for ships and offshore vessels, facility conversion works, expansion of yard space and so forth.

Some of those impacted included Hantong Ship Heavy Industry, Mingde Heavy Industry, Zhenhua Heavy Industries, Hongqiang Heavy Industry, Yangzhou Dayang Shipbuilding, Sainty Marine, Taizhou Kouan, New Century Shipbuilding, New Yangzi Shipbuilding, Jinfu Shipbuilding, Jingjiang Nanyang Shipbuilding, among others.

The Jiangsu authority asserted that together with the relevant industry players, there is a need to continue to dissolve the overcapacity and control the market from irrational expansion.

“Those projects that do not comply with industrial policies and standards, environmental protection, and layout planning requirements during construction have been ordered to stop. For those projects that have yet started, they are not allowed to commence work,” the statement said.
The statement also mentioned that the government encourages the existing shipbuilders to optimise capacity through consolidation and mergers, and upgrade existing facilities in order to build higher specification ships.

The global downturn in the shipbuilding sector, particularly in China, has been evident for the past several years as newbuilding orders plunged amid an oversupply of ships.

In the first nine months of this year, Jiangsu shipyards received 123 new vessel orders with a total tonnage of 5.02m dwt, a sharp 72.4% decrease compared to the previous corresponding period.

The Jiangsu government has set a target to remove 10m dwt of yard capacity over the next five years starting from 2013. At its peak, the province’s shipbuilders completed 23-25m dwt of newbuilding capacity a year, but the capacity has fallen to 12.27m dwt in the first nine months of this year, representing a 55% year-on-year decrease.