Chinas shipyards to double capacity

China’s two largest shipyard groups plan to double capacity by 2010, challenging South Korea as the world’s top builder. China State Shipbuilding Corp., the nation’s biggest, will have a potential 12.3 million deadweight tons output by 2010 from 6.02 million last year, while China Shipbuilding Industry Corp. will double its annual capacity to 10 million deadweight tons.

Last year, China overtook Japan as the number two shipbuilder with 24% of the global order book for new ships compared to 33% for South Korea.

China’s expansion may cause today’s record prices for new ships to fall, especially as yards increase productivity. The biggest challenge for China “will be skilled workers,” said Alan Gavin, president for marine at LR. “You can build shipyards as there’s plenty of land here, but in the end they have to build a ship in a quicker time frame.”

China Shipbuilding Industry (CSIC) will cut the man- hours required for each ton built by half to 20 to 25 by 2010 from 40 to 50 today. The group operates yards in the north of the country. China State Shipbuilding Corp. (CSSC) said it has cut the construction period of a 175,000 dwt bulk carrier to 300 days from 480 days at the start of 2005. CSSC’s plants are in and around Shanghai and in the south of China.

The price of a 300,000 dwt VLCC rose to a record $131 million last month, from $110 million in 2004, according to Clarkson. China plans to take a 30% share of the global shipbuilding market within the next ten years according to a government official. He denied that the growth of China’s yards would lead to an oversupply of global shipbuilding capacity.

CSSC aims to become one of the world’s top three shipbuilders and expects sales to more than double to 100 billion yuan ($13 billion) by 2010 from about 40 billion yuan in 2006. CSIC, which has seven shipyards, aims to boost revenue to 100 billion yuan from 62 billion yuan in the same period.