Ships being built at a shipyard in Wuwei county, Anhui province. Chinese shipbuilders are witnessing falling orders due to the effect of the global economic slowdown.
For Chinese shipbuilders, this is probably the worst of times -- and the hardest period has yet to come. Major ship owners, both domestic and foreign, are expected to go slow on new orders during the next one-and-a-half year as they wait for the global economy to recover.
Industry insiders and analysts said the Chinese shipbuilding industry, the largest worldwide, would face its real test a few months from now, when a slew of small- and medium-scale ship builders start to stop production or close down factories, and large builders lay off workers and cut salaries.
Ship owners usually order vessels three years before they are put to use. So, the financial crisis, which erupted late last year, actually exerted less of a negative impact on the shipbuilding industry. In fact, the shipping sector was hit more by the slide in foreign trade.
Despite a big contraction in new orders and cancellation of earlier orders by international ship owners, Chinese shipbuilders have been working on old orders, and the medium and small players have been limping along due to financial support from the local government.
But, as the prospects for the global economy are still looking bleak, shippers are reluctant to book new orders; and shipbuilders are starting to get more and more anxious.
"We haven't signed any new deals since late last year, but this is not the worst part. It's hard to predict when the industry would show any positive sign of recovery," said Hu Keyi, a senior executive and chief engineer at Shanghai Jiangnan Shipyard, one of the nation's largest shipbuilders.