SHANGHAI, China Chinas surplus of shipbuilding capacity has probably been overestimated, the countrys association for the shipbuilding industry said.
It attributed this to some small and medium-sized shipbuilders having already been phased out.
Production of ships ordered before the financial crisis has contributed to shipping overcapacity, reducing freight rates while global trade remains lower than expected.
While the industry is definitely in surplus, the lack of orders since 2009 has already forced many companies out of business, Zhang Guanqin, secretary-general of the China Association of the National Shipbuilding Industry (Cansi), told the China Securities Journal.
Shipbuilding capacity in China is currently estimated at 70 million deadweight tonnes (dwt), while key shipbuilders have ship orders for more than 100 million dwt, Zhang said.
But there are two upside factors, he said, noting that there is limited room for prices for new ships to fall further, as they have already fallen below the production cost curve, and growing demand for ships used by companies conducting offshore oil and gas exploration.
Cansis data showed that China built 35.49 million dwt of ships during the first seven months of 2012, down 7.7 percent year on year.
New orders fell 50.7 percent year on year to 11.64 million dwt.