Asia/Pacific News
A "Wave of Bankruptcies" Predicted for China's Dry Bulk Shipping Sector in 2016
The Shanghai International Shipping Institute (SISI) predicts a surge in bankruptcies within China's dry bulk shipping industry, Reuters reports.
The institute basis its prediction on a survey of 50 of the country's biggest dry bulk shipping lines, which found that over 60 percent are struggling with long-term losses and 40 percent are facing liquidity problems.
Additionally, 60 percent of the companies surveyed did not expect the Baltic Dry Index to climb above 800 points; this week, the Index fell five points to a fresh all time low of 468.
In a new report this week, SISI states, "The market is extremely depressed and these conditions are likely to continue in 2016, exacerbating dry bulk firms' losses, increasing costs, and creating obstacles to obtaining financing.
"This will kick-start a wave of bankruptcies."
The global surplus of vessels along with reduced demand for commodities have already caused some Chinese companies to go into receivership, including Winland Ocean Shipping Corp. and state-owned shipbuilder Wuzhou Ship Repairing & Building Co Ltd.
The SISI report also states that business sentiment has slumped amongst the container shipping, ports and shipping services firms it surveyed.
But if earlier prognostications still carry weight, SISI is bullish about China's shipping industry overall: last April it predicted that the fleet will become the world's largest by 2030.
