China’s overall shipbuilding capacity is prospected to shrink by up to 35% over the next two years as the Chinese government has focused on large state-owned shipbuilders while a number of smaller private-owned shipyards have been in danger of closure.

DVB Bank stated that state-run builders such as China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC) saw their market shares expand to 40% in 2013, up from 30% recorded two to three years ago, propelled by governmental supports.

Particularly, new orders placed by compatriot and state-owned shipowners account for almost 40% among orderbook of the two state-run builders, DVB added.

In addition, the financial institution commented that state-run builders already have 50% of their delivery slots scheduled till 2015 while smaller private-owned builders have filled up only 20% of their slots. It expected that about 25% (in cgt terms) of Chinese shipbuilding capacity will reduce within the next two years and shrink to the similar level as the one seen in 2010.

And it continued that it is very likely to see additional 10% capacity reduced ahead, but this depends on market situation and governmental support scale.