The worst is over?

“The worst of the shipbuilding market is over,” said Jiangsu Rongsheng Heavy Industries’ chairman and president Chen Qiang. He adds that newbuilding enquires have resumed but at a slower pace and in smaller numbers.

He believes it will take more time for anyone to conclude a deal as a state of stalemate now exists between shipbuilders and shipping companies. “Shipowners are seeking low-priced newbuildings, while shipyards are hesitant to accept the orders in the fear that shipbuilding costs may rise in the future,” said Chen. A further reason holding back shipbuilders from contracting cheaper newbuildings is that they suspect existing owners may seek lower prices on their existing order contracts.

“If we [shipyards] start taking in low-price newbuildings, we will face a hard time trying to account for it to our existing customers,” Chen warned. He adds that the Chinese government’s aid for the shipbuilding industry will help the big and established shipyards to come out even stronger. “Most of the state’s help is channelled to the big yards. This will enable them to concentrate on their production and build better products,” said Chen.