Small and medium Chinese shipyards are starting to halt production because of shrinking order books, while many mainland shipbuilders' losses are growing, according to China's National Development Reform Commission (NDRC).
'In September our nation's shipbuilding industry only received 940,000 deadweight tonnes (dwt) of orders, the lowest since June 2006,' the national economic planning agency said on its website.
'As of September 30, 30 per cent of shipyards in the entire country have not received orders. In the first half of next year, some shipbuilding companies may not be able to start operations.'
For the first nine months of this year, new orders from mainland shipyards plunged 42.8 per cent year on year to 29 million dwt, it said. A glut in China's shipping overcapacity is being exacerbated by a recent 67.2 per cent jump to 7.86 million tonnes of completed ships in September from August.
In the fourth quarter, new orders for mainland shipbuilders would remain low and orders on hand would suffer an accelerated decline, the China Association of the National Shipbuilding Industry predicted.
In the first eight months of this year, there were 249 loss-making Chinese shipbuilding companies with a total accumulated loss of 2.7 billion yuan (HK$3.2 billion), up 37.9 per cent from 2010, including 114 shipbuilders whose losses were 110 per cent bigger than last year, NDRC said.
According to Worldyards data on the larger Chinese shipyards, the percentage of built ships that have received firm orders from customers fell from 98.3 per cent in the peak year of 2008 to 70.9 per cent this year, and this is projected to fall to 68 per cent in 2012 and 28.4 per cent in 2013.