In Shipbuilding News 02/06/2015
Statistics compiled by reporters of Chinese online business news service Caixin show that five major shipbuilding enterprises in China have gone bankrupt over the past six months.
In December 2014, Ming De Heavy Industry, the leading shipbuilder in Nantong, Jiangsu province, was told by its creditors to undergo bankruptcy reorganization.
In March this year, East Heavy Industry, the largest shipbuilder in Taizhou, also in Jiangsu, filed for bankruptcy. That same month, STX (Dalian) Shipbuilding, the largest foreign-invested shipbuilding enterprise in China, was instructed to enter liquidation with debts as high as 24 billion yuan (US$3.87 billion).
In addition, Zhuangji Shipbuilding, the largest shipmaker in Wenzhou, Zhejiang province, declared bankruptcy in April.
Apart from these companies, several other renowned shipbuilders, including Sainty Marine, which is listed in the A-share market, were also reported to be struggling with financial woes.
According to the China Association of the National Shipbuilding Industry, the number of shipbuilding orders posed a year-on-year drop of 78.1% in the January-April period.
In April, orders for new ships decreased 6.8% from the same month of last year, the tallies show.
Statistics by Clarksons, the world’s leading provider of integrated shipping services, also indicate severe recession in terms of new orders received by the Chinese shipbuilding industry since the beginning of the year. The drop in orders has been continuing since last June, Clarksons said.
One private shipbuilding company owner told Caixin that “many companies have been forced to take orders even though they know the orders will only generate minor profits, or no profits, or even losses, because they have to keep operating.”
According to a senior ship broker at the ACM Shipping Group, a rapid cost surge, low prices on shipbuilding contracts and inefficient company management are the reasons the shipbuilders have fallen into financial straits.
