Shipyards bankrupt due to sluggish demand

Many small-sized shipyards in China, plagued by a shortage of new orders, are on the brink of bankruptcy as a result of the sluggish world economy, a glut of vessels and soaring fuel prices.

Zhejiang Jingang Shipbuilding Co Ltd, headquartered in the Taizhou city of East China's Zhejiang province, recently filed a bankruptcy petition to the Taizhou Municipal Intermediate People's Court due to its significant loans and lack of new orders, said a public relations officer of the court, without elaborating.

Founded in 2004, the company has the ability to build four vessels with a tonnage of over 16,000 tons per year, making it the biggest export shipbuilding enterprise in Taizhou, its website says.

In February, the company had not received any orders since last year, Liu Min, a senior director at Jingang said at the time.

Most banks regard the export-led shipbuilding industry as "high risk", refusing to underwrite or extend loans to related companies.

The Jingang shipyard is only one among many similar Zhejiang-based shipyards that have suspended business and dismissed employees due to the difficult market conditions. In June, Ningbo Hengfu Shipping Trade (Group) Co Ltd and Ningbo Beilun Sky Shipbuilding Co Ltd both filed motions to sell off assets.

Industry losses are widespread, as the volume of new orders in 2011 fell 52 percent, according to the China Association of the National Shipbuilding Industry.

In the first five months of 2012, China built ships amounting to 22.5 million deadweight tons, down 10.1 from the previous year.

New orders totaled 9.45 million deadweight tons, a drop of 47.3 percent from a year earlier. Combined outstanding orders were 134.4 million deadweight tons, down 10.4 percent from the end of 2011.