Economic crisis sinks shipbuilders

China's shipbuilding industry has fallen into a serious downturn and almost all of the country's shipbuilders have seen considerable drops in their new orders this year.

But Chinese shipbuilders are not the only ones feeling pinched. Data from Clarksons, the world's largest shipping broker, show that the volume of new vessel orders in the first seven months of this year fell significantly compared with the same period last year.

And the Clarkson Newbuilding Price Index, a gauge measuring vessel price changes, had declined to 129 points as of the end of July, down from 139 points at the end of 2011.

Both the trading volume and prices of the shipbuilding market have been significantly affected by a sharp reduction in new orders, which has derived from the mounting liquidity pressures facing the industry. With banks in Europe reluctant to issue credit while a debt crisis batters the region, shipowners across the world have had to continuously curb their investment on new vessels.

With the outlook on the industry still blurry due to the uncertainties over when the US economy will stabilize and the EU crisis will end, shipbuilding activity is expected to remain slack in the coming two or three years. A recovery may not appear until 2015.

Based on a speech made by Yu Baoshan, chairman of the board of Guangzhou Shipyard International Co, during a Sino-Danish Marine event in Shanghai.