With the Chinese government moving to support state-owned yards it will be the small privately owned shipbuilders that will bear the brunt of the reduction in capacity. While state owned yards are already 50% full for 2015, many smaller yards have 20% cover or less for 2015.
“Privately owned Chinese shipyards (especially small privately owned yards) are expected to experience a tough ride. Without government support forward cover with less than 20% of 2015 slots being sold. This means that the closure of these small yards without out any new orders is now inevitable,” the report warned.
In total DVB Shipping Research expects to see a 25% reduction in Chinese shipbuilding capacity over the next 24 months, with a further 10% of capacity expected to face “tremendous pressure” with survival dependent market conditions and government policies. “Small privately owned Chinese shipyards are expected to suffer the most with almost 75% of the capacity is likely to disappear,” it said.
In particular small private Chinese that are relying heavily on bulk carriers for over 50% of their orderbook are at risk. “Although these yards are large in number, the impact from their closure in the Chinese shipbuilding industry is expected to be limited.”
The small private yards that are expected to do best are those that are moving into niche shipbuilding markets such as building gas carriers and offshore supply vessels.
The result will be that by 2018 30 state-owned yards will have increased their share of total capacity to 52% from 39% today according to figures from DVB Shipping Research and Clarksons. The number of small privately owned yards will meanwhile reduce dramatically from 150 today to just 19 in 2018, with their share of capacity falling to 8% from 22%.
Some casualties are also expected among large privately owned yards with the number falling to 17 by 2018 from 20 at the moment, although share of capacity will increase slightly to 34% from 32%. The number of joint venture yards will remain at 10.
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