Hard for shipyards to weigh anchor amid recession

Chinese shipyards, troubled by the declining world shipping industry, have sunk deeper into their woes, according to the latest industry data.

Industry analysts and companies, meanwhile, expect to see the situation continue to worsen until early next year and are expressing doubts that a substantial recovery will arrive in the next two to three years.

Production at Chinese yards, the world's biggest shipbuilders by tonnage, declined steeply during the first three quarters of the year, official data show.

During the period, finished capacity dropped by 18.5 percent from last year to 41.58 million deadweight tons, and new orders decreased by 46.9 percent year-on-year to 15.41 million deadweight tons, according to the latest data recently released by the Ministry of Industry and Information Technology.

In the meantime, Chinese yards' order book stood at 121 million deadweight tons by the end of September, down 19.4 percent from the amount at the end of 2011.

Industry analysts blamed the industry woes on a glut of vessels, rising oil and other costs as well as uncertainties in world economic growth caused by Europe's debt troubles and China's economic slowdown.

These influences have put a dent on world shipping demand and made shipowners reluctant to order new vessels, they added.

"The overall demand is growing, but the global trade is growing at a slower pace than we used to see," Lars Rober Pedersen, deputy secretary-general of the Baltic and International Maritime Council, the world's largest association of shipowners, said in a recent interview.

Sun Bo, a senior executive with China Shipbuilding Industry Corp, one of the country's largest shipbuilding conglomerates, said: "Last year there was still a demand for more sophisticated vessels. This year, market demand is weak for all kinds of vessels."

He said the market will be even more difficult at the beginning of next year.

"A recovery is unlikely to happen within the next three years, and only big shipyards with lots of orders are likely to survive."

Tan Zuojun, former general manager of the China State Shipbuilding Corp, another large State-owned shipbuilder, estimated that at least half of China's more than 3,400 shipyards will go bankrupt within the next three years.

Some industry analysts were even more pessimistic about the industry's prospects, saying that only 300 of the biggest yards in the country will still be operating when the market starts to improve.

Zhang Guangqin, chairman of the association, has called on the banking sector to support the country's shipbuilders, particularly saying that financing should be used to secure orders from foreign shipowners and ship operators.