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China's shipbuilders strive to navigate economic cold

(Xinhua) Updated: 2016-02-16 14:35

WUHAN - Along the vast, misty Saijiang River in southeast China's Fujian province, around 100 docked cargo ships await buyers amidst a winter chill on China's ship sales.

On the river banks, gantry cranes sit deserted. The only activity in sight is a few workers tinkering with a small fishing boat. It's hard to connect the spiritless place with one of China's top private shipbuilding bases.

"We are getting very few orders these days," said Zhang Qingjie, general manager of Huahai Shipbuilding Co Ltd, a leading shipbuilder in Saiqi township. In its heyday, Zhang's company boasted more than 1,000 employees, with 22 ships being built simultaneously on the bustling banks. "Now only around 20 people work in our company," Zhang said.

China's shipbuilding industry is experiencing severe economic stress this winter as new orders are slashed and companies are shut down.

The Baltic Dry Index (BDI), a barometer of the shipping industry's status, has plummeted almost 30 percent, dropping below 320 points in January, according to the latest figures. The BDI measures the shipping fees of dry cargo such as iron ore, cement, grain and coal. Falling BDI means weakening global demand for raw materials, thus less need for shipping services.

Sagging demand has already impacted China's shipbuilding industry, with orders for new ships falling 47.9 percent year on year to about 30 million dead weight tons (DWT) in 2015, according to the China Association of the National Shipbuilding Industry.

A good number of shipbuilding heavyweights in China have filed for bankruptcy, including the private Dongfang Heavy Industry Co Ltd and Mingde Heavy Industry Co Ltd in the eastern Jiangsu province.

In November, the Wuzhou Shipbuilding Co Ltd headquartered in Zhoushan, Zhejiang province, filed for bankruptcy, becoming the first State-owned shipbuilder to do so.

"A lot of shipbuilders may not make it through the winter," said Lin Ruijin, secretary-general of the Fu'an Shipbuilding Industry Association in Fujian province.

In Saiqi township, nine of the 43 large shipbuilding companies have already been wiped from the market, while only a few of the remaining 34 are still in operation.

Lin Musong, deputy general manager of the local Funing Shipbuilding Co Ltd, said his company has slashed capacity by half, as ship sales have fallen by 50 percent.

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