Contracting at Chinese yards fell significantly in 2015, but the impact has varied greatly across different types of yards. Many larger, state-backed builders have continued to secure a steady volume of orders, supported by domestic, state-backed owners. Meanwhile, the share of contracting at independent yards has dropped largely, with many of these builders facing difficulties due to a lack of new orders.
State Yards Taking The Lead?
Shipyards in China are segmented in Clarksons Research data into a number of 'administration types' according to ownership. 'State-backed' builders include the yards owned by shipbuilding groups CSSC and CSIC, as well as national government yards controlled by state-owned groups such as COSCO Shipping. Other yards can be categorized as independent, foreign owned (FO), joint venture (JV) or local government. The share of contracting accounted for by 'state-backed' yards in China fell significantly from 73% in 2001 to 27% in 2009, in CGT terms. Privately owned builders expanded rapidly in this period to take the majority of orders, encouraged by a state-led drive to expand shipbuilding. However, this trend has been reversed since 2010, with many independent yards now facing difficulties due to the decline in bulker ordering. State owners have supported the shipbuilding industry primarily through ordering at 'state-backed' yards, which took 59% of total orders at Chinese yards in 2015, in CGT terms. The government's 'White List', which includes most CSSC and CSIC yards, has also broadly benefited state builders.
A Helping Hand
The share of contracting at state-owned groups CSSC and CSIC hit 40% in 2015 in CGT terms. Although the total volume of orders at CSSC/CSIC yards fell year-on-year, their share of total contracting at Chinese yards increased, driven primarily by orders from state shipping companies. 69% of total orders placed at CSSC/CSIC yards in numerical terms were from domestic owners, compared to 18% of orders at independent yards. This activity has been supported by the 'scrap and build' subsidy, which has incentivised Chinese owners to place new orders at home. The share of total orders accounted for by national government yards also rose last year to 19% in CGT terms.
Fighting for Orders
Although the government has used the 'White List' to offer some support to independent builders, which made up 8 of the 11 builders added in 2015, the decline in ordering has had a severe impact on many smaller yards. Ordering at independent yards decreased in 2015 by 53% on an annual basis in CGT terms. Although some independent yards have been highly successful in competing for contracts, with Jiangsu New Yangzijiang winning a reported 50 orders in 2015, many smaller yards have faced difficulties. Just 24 independent Chinese yards took an order in 2015, down from 61 in 2014.
Having fallen during the shipbuilding boom, the proportion of orders placed at 'state-backed' yards in China has risen sharply since 2010, with Chinese state owners providing significant support. With contracting activity weak and many independent yards facing difficulties, it appears likely that this trend will continue.