Consolidation among Chinese yards inevitable

Dalian: The China Daily has reported that China’s shipbuilding industry, which last year suffered its steepest annual decline since 2003, is likely to be squeezed further this year by shrinking order books and order cancellations as the global economy remains in recession.

The industry, the world’s second largest by capacity, will see more small shipyards swallowed by big players as mergers and acquisitions are expected to pick up pace this year.According to market research company Clarkson Research Services, Chinese shipyards saw their orders plunge 40.9%YoY in 2008 to 58.18 DWT against an average global fall of 43.2%.The China Association of the National Shipbuilding Industry said in its latest report shipyards worldwide will see orders further plunge to 40 to 60 million DWT in 2009, while the new orders Chinese shipyards receive is likely to drop to 20 million to 30 million DWT a 48.4% to 65.6% fall form a year earlier.Mr Ye Zhigang analyst with Haitong Securities said in a report that 15% to 25% of Chinese yards’ orders or 300 million DWT to 500 million DWT are likely to be canceled over the next three years, five percentage points higher than the global average. He said that the industry will remain in depression during the next three years and another period of growth will come after 2013.

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