China’s ship scrapping and newbuilding
subsidy scheme aimed at encouraging owners to renew their fleet and creating
jobs for shipyards may no longer be a feasible policy, according to an industry
veteran.
Li Shaode, ex-chairman of the former China
Shipping Group, said a further extension to the expiry of the policy is not
expected to benefit the market in a significant way.
Beijing first announced the scrap-and-build
policy in December 2013, offering shipowners a two-tranch subsidy to encourage
scrapping of vessels before their operational expiry date, and to build new and
more energy efficient ships as replacements.
The policy, originally due to expire in 2015,
was extended by to 31 December 2017.
Li, who is also a member of the National
Committee of the Chinese People’s Political Consultative Conference, said he
had called for an extension to the policy to 2017, but the scheme should now be
allowed to lapse.
Li told reporters that under current market
conditions, the continuation of the policy would lead to very low margins or
even unprofitable deals for shipyards, while the tonnage overcapacity problem
will persist.
In the absence of the policy, the industry
would be allowed to consolidate and restructure further even if more
bankruptcies are needed, according to Li.
In 2016, Chinese yards delivered close to
100m dwt of vessel tonnage and received 27.41m dwt in new orders, while 44m dwt
of tonnage were demolished, giving rise to signs of a deflation to oversupply
as the market continues to consolidate.
Li retired as chairman of China Shipping
Group in November 2013 and passed the baton to Xu Lirong, who is now chairman
of the merged China Cosco Shipping Corporation Limited (Cosco Shipping).
Source: seatrade-maritime.
09 March 2017
http://www.seatrade-maritime.com/news/asia/china-s-scrap-and-build-policy-may-be-discontinued.html
China’s ship scrapping and newbuilding
subsidy scheme aimed at encouraging owners to renew their fleet and creating
jobs for shipyards may no longer be a feasible policy, according to an industry
veteran.
Li Shaode, ex-chairman of the former China
Shipping Group, said a further extension to the expiry of the policy is not
expected to benefit the market in a significant way.
Beijing first announced the scrap-and-build
policy in December 2013, offering shipowners a two-tranch subsidy to encourage
scrapping of vessels before their operational expiry date, and to build new and
more energy efficient ships as replacements.
The policy, originally due to expire in 2015,
was extended by to 31 December 2017.
Li, who is also a member of the National
Committee of the Chinese People’s Political Consultative Conference, said he
had called for an extension to the policy to 2017, but the scheme should now be
allowed to lapse.
Li told reporters that under current market
conditions, the continuation of the policy would lead to very low margins or
even unprofitable deals for shipyards, while the tonnage overcapacity problem
will persist.
In the absence of the policy, the industry
would be allowed to consolidate and restructure further even if more
bankruptcies are needed, according to Li.
In 2016, Chinese yards delivered close to
100m dwt of vessel tonnage and received 27.41m dwt in new orders, while 44m dwt
of tonnage were demolished, giving rise to signs of a deflation to oversupply
as the market continues to consolidate.
Li retired as chairman of China Shipping
Group in November 2013 and passed the baton to Xu Lirong, who is now chairman
of the merged China Cosco Shipping Corporation Limited (Cosco Shipping).
Source: seatrade-maritime.
09 March 2017
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