Wednesday 11 February 2009

China's Shipbuilding Industry Faces Challenges Ahead

Falling order volume, order cancellations, and financing problems spell trouble in 2009 for China's shipbuilding industry.

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Guanyu said...

China's Shipbuilding Industry Faces Challenges Ahead

Falling order volume, order cancellations, and financing problems spell trouble in 2009 for China's shipbuilding industry.

Zhou Lingling, Caijing
11 February 2009

China’s shipbuilding industry will face severe challenges, including falling order volume, cancelled or held-back orders and financing problems, in 2009, warns the China Association of the National Shipbuilding Industry (CANSI) in a report issued on Feb 6.

With tightened credit loans, ship buyers are finding it difficult to finance orders and are choosing to delay payment, or even hold back or cancel orders. If the situation persists, the year ahead will be tough for shipbuilders, the report said.

China’s major shipbuilder COSCO Corporation (Singapore) Limited (SGX: COSI) received four orders cancellations in the past two months, with delayed payments on other orders.

Delayed or cancelled orders in 2009 are estimated to total more than 10 million deadweight tons, said CANSI secretary Wang Jinlian.

Falling new orders are also a major concern. The report expects this year’s orders to be half that of last year’s. The dip in order volume is also due to the bursting of an industry bubble that greatly relied on bulk carrier orders.

The report urges shipbuilders to keep the production line running by maintaining order volume. Deputy director of the Equipment Industry Department Li Dong said that the industry must maintain its market and order volume, while keeping up their payment and delivery duties.

Caijing learned that the government will soon undertake an industry revival plan to strengthen enterprises’ financing abilities. The Export-Import Bank of China will finance China State Shipbuilding Corporation’s projects in a deal signed on December 25, 2008.