Shipyards say stimulus doesn't go far enough

PUBLISHED : Friday, 05 June, 2009, 12:00am
UPDATED : Friday, 05 June, 2009, 12:00am

Beijing released further information on its stimulus package for the shipbuilding industry yesterday, but shipyards claimed the measures were vague and did not do enough to address problems in the industry.

The measures, coming after a previous measure in February, sought to facilitate existing ship orders by encouraging bank lending and urged shipyards to build high-value-added ships in an effort to survive the downturn in demand.

'The measures are too vague, and they could not help solve the problem,' said Ren Yuanlin, chairman of Yangzijiang Shipbuilding Group, the second-largest private shipyard on the mainland.

The new measures include urging banks to provide sufficient capital to finance the construction of vessels, extending debt to shipyards faced with cancelled ship orders and helping shipyards raise funds from listings and issuing bonds.

Beijing also wants mainland shipping companies to speed up the retirement of old ships while curbing capacity by freezing new shipyard projects for the next three years.

But Mr Ren said he was looking for details such as how banks would relax financing to buyers and shipyards, as well as what subsidies would be offered.

'There were no new orders for vessels in May, and there's no sign of a turnaround in the delay of vessel orders, even from the major shipping companies on the mainland,' said Jack Xu, a transport analyst at Sinopac Securities.

Geoffrey Cheng, a transport analyst at Daiwa Institute of Research, said mainland shipyards have had orders cancelled and delayed.

Sentiment improved on the demand for bulk vessels after the recent rebound in the Baltic Dry Index. 'Shipping companies said the market was too optimistic on the earnings outlook that was implied by the BDI,' Mr Cheng said.