China Shipbuilding Association: overcapacity in shipbuilding industry is overestimated

Recent statistics show that from January to July, China's orders for new ships were 11.64 million DWT, down 50.7% year-on-year. China's ship net profit for the first half of the year fell 63% year-on-year and some of the small boat factories went bankrupt. Zhang Guangqin, president of the China Shipbuilding Industry Association, said that the shipbuilding industry is a relatively cyclical industry. The current downturn will continue for some time, and there will be no fundamental improvement in the second half of the year. At present, the market is more worried about the serious overcapacity in the shipbuilding industry. The overcapacity of the shipbuilding industry is objective, but it is not as serious as the market imagines. The production capacity of the shipbuilding industry is changing dynamically with market demand. Some of the small boat factories have not received orders since 2009 and have already closed down. Many of the facilities that were invested late have not formed actual production capacity, and the capital behind them has also withdrawn. It is estimated that the production capacity of China's shipbuilding industry is around 70 million tons. There are more than 100 million tons of on-hand orders from the backbone shipyard. There are jobs to be done this year and next, without excessive panic. Zhang Guangqin said that when the demand for new ships is in low demand, there are two positive factors worthy of attention: First, the price of new ships has been declining, which is more than 50% lower than before the financial crisis. Some have fallen below the shipyard cost line and continue to go down. The space is not big. Second, although the ship transportation market is sluggish, the offshore engineering equipment market for oil and gas exploration is very active, and the order amount is much larger than that of traditional ships. The current shipyard production pace is slowing down, and product structure adjustment can be accelerated. The China Shipbuilding Industry Association has called for domestic banks not to "one size fits all". Backbone shipbuilding enterprises such as the state-owned Dalian Shipyard, Jiangnan Shipbuilding and private Rongsheng Heavy Industry, Yangzijiang Shipbuilding, etc., still have the competitive edge. Domestic financial institutions can seize the opportunity of foreign ship owners to obtain credit support and guide them to put new ships and supporting equipment in the country as much as possible to achieve a win-win situation with the shipbuilding industry.

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