OREANDA-NEWS. May 14, 2012. The China Newbuilding Price Index (from April 15 to 30) fell 0.4 per cent to 905 points and a four per cent fall compared to 939 points earlier this year.

The index was first released in July 1 last year with 1,000 points as its base value. But since then, the index has been falling, especially in the field of dry bulk ships. The latest dry bulk ship price is 880 points, 10 per cent lower than when first published.

Worse than falling price is shrinking order book. According to the statistics from the China Association of the National Shipbuilding Industry (CANSI), during the first quarter, China was getting a total of 5.59 million deadweight tonnes' order, down 48.7 per cent year on year. And there's no evidence of getting any in April.

Besides decreasing price and order, Chinese shipyards are facing fierce competition from Korean rivals. From January to April, 35 medium oil tankers have been ordered. But most of them are ordered from Korea. The domestic container shipbuilding market is also depressed with Korea's Hyundai Heavy Industries has been given the order of ten 13,800-TEU ships from Evergreen.

Experts pointed out that, compared to Korea, where government unites banks, shipyards and ship management companies, the China's ship building industry lacks support from the government. Private shipyards are even left to die. CANSI president Zhang Guangqin has been appealing for domestic banks to increase lending to ship sellers and buyers.

During the first quarter, the total of the world's ship finance plunged 60 per cent year on year and 68 over the previous quarter to USD 5.9 million. Experts noted that as ship finance in the western world slows down, Chinese banks should take the opportunity to support the domestic shipyards and fleet's development towards higher added value and technology.