Trade Resources Industry Views China Announced Revisions to It Subsidy Program

China Announced Revisions to It Subsidy Program

China announced revisions to it subsidy program for companies breaking old transport ships and single-hulled tankers Monday, but industry insiders said this would do little to cut restrictions on what ships could be broken.

"This will benefit ship owners directly, not us ship breakers. Our shipbreaking orders may increase only slightly at most," a source from Changjiang Ship-Breaking Yard said. "As far as I'm concerned, the influence will be the same as before. Ship builders' orders could increase a little."

A number of restrictions would prevent the policy from achieving its goals, industry sources told Platts. Broken vessels must be Chinese and broken by designated ship breakers. Replacement vessels must also be built by Chinese shipbuilders and must be at least equal in tonnage to the broken vessel and would have to be registered with the China Classification Society.

The policy, jointly announced by the ministries of finance and industry and information technology as well as the national development and reform commission, would give ship owners up to Yuan 1,500/gross ton of ship scrapped in subsidies.

Ship owners would receive half the subsidy after shipbreaking and the rest after the replacement ship has been built. Previous subsidies, released in 2010, required ship owners to complete shipbreaking and building before receiving the subsidy.

However, insiders said this would do little to resolve shipping overcapacity, which is the key point for shipping currently.

Zhang Guangqin, president of the China Association of the National Shipbuilding Industry, said the combination of ship breaking and building for the new subsidy would mean no net decrease in shipping capacity.

Further details of the subsidies have yet to be released. In particular, no list of designated ship builders and breakers has been released.

Source: http://news.chemnet.com/Chemical-News/detail-2207464.html
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China's Ship Breakers Respond Coolly to Revised Subsidy Scheme