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The shipbuilding industry is "crisis". Abrasives and abrasives companies are lying in the middle of the gun.
The wave of bankruptcies began in late autumn, in October, when the weather turned cooler, and the domestic shipbuilding industry found itself plunged into the chill of winter. Taizhou, a hub for shipyards across the country, offers a somber scene along the northern bank of the Jiaojiang River. Idle gantry cranes stand motionless on the shore, resembling solitary giants silently enduring the passage of time. Nearby, scattered on the river surface, lie seven or eight ships, a stark contrast to the bustling activity of the past. "There are fewer than half the ships we used to see here, and most of them are four or five years old," said Liu Xiaochun, director of the Haichang Shipyard Office.
It's hard to believe that just a few years ago, this place was thriving. "The area was teeming with workers, and the gantry cranes were almost always in operation," recalled Liu Xiaochun. Back then, the nights around Jiaobei were illuminated, filled with the noise of bustling activity. Liu Zhuohai, general manager of Ningbo Mingyuan Shipping Co., Ltd., explained to reporters that "fewer orders, financing difficulties, and idle capacity are the three main challenges facing shipbuilding enterprises. These businesses are truly struggling."
Since 2012, due to strained capital chains, a sharp drop in orders, delivery difficulties, and low concentration, China's shipbuilding enterprises have dwindled from 3,400 to just 300. Small and medium-sized private enterprises have been hit particularly hard. "It used to be tough to secure orders, start projects, and obtain financing. Now survival itself is the challenge," noted Bao Zhangjing, chief researcher at the China Shipbuilding Industry Economic Research Center. The shipbuilding industry is experiencing a wave of closures.
The "vanishing" shipbuilding companies face tight capital chains, drastically reduced orders, delivery difficulties, and low concentration. This situation is akin to a massive typhoon battering the Chinese shipbuilding industry. With fewer and fewer deliveries, it feels like the industry is having its last meal. Employees are on leave, uncertain when they might return to work. Many shipping companies have fallen, and the industry predicts that Chinese shipbuilders will shrink from over 3,400 during the peak period to only around 300—just a fraction of what they once were. The once-booming shipbuilding industry is now entering a severe winter.
In March this year, the well-known Nantong Huigang Shipbuilding Company shut down. In May, Ningbo Hengfu Shipbuilding Co., Ltd., Blue Sky Shipbuilding Group, and Zhejiang Jingang Shipbuilding Co., Ltd., the largest export ship company in Taizhou, Zhejiang, filed for bankruptcy. In June, Dalian Oriental Seiko Ship Co., Ltd., a joint venture between China and South Korea, declared bankruptcy. Last year, on August 18, Wenzhou Yueqing Oriental Shipbuilding Group, known as the "Wenzhou Ship King," which had been listed on the London Stock Exchange AIM market, faced turmoil less than a year after its listing. The Eastern Shipbuilding was delisted on June 8 this year. Once plagued by difficulties in securing orders, starting projects, and obtaining financing, the industry now faces the ultimate struggle—mere survival. What's most concerning is that many in the industry believe that despite the reshuffling over the past two years, the real wave of bankruptcies has only just begun.
The shipbuilding industry's reliance on abrasives is undeniable. As industrial "teeth," abrasives are widely used in the heavy machinery sector, including shipbuilding. The industry requires a variety of non-metallic and metallic materials such as wood, rubber, plastic, glass, ceramics, stone, copper, aluminum, cast iron, steel, and more, as well as advanced materials like cemented carbide, high-speed steel, high-vanadium steel, titanium steel, stainless steel, etc. Abrasives are used for roughing, coarse grinding, semi-finishing, fine grinding, fine grinding, and high-precision low-roughness grinding, depending on the purpose and amount of processing. They enable operations such as cylindrical grinding, internal grinding, surface grinding, tool grinding, special grinding, electric welding grinding, honing, superfinishing, grinding, and polishing.
Following the global financial crisis, new orders in the shipbuilding industry plummeted, compounded by an unprecedented surge in deliveries of new ships. Handheld orders continued to decline. In September 2008, there were 11,305 handheld orders at 955 shipyards worldwide, with shipyards under construction doubling from 354 in 2000. According to Clarkson's statistics, in the four years post-crisis, new ship orders worldwide continued to fall, reducing to 4,795 at the start of October, with the number of shipyards under construction dropping to 538—a sharp decline of 40%. By the end of 2012, 240 shipyards faced a crisis of depleted workloads. The Chinese shipbuilding industry, already battered by order losses, has also dragged grinding enterprises into the downturn, worsening the plight of an already struggling industry.
Modern shipbuilding technology is advancing toward high levels of mechanization, automation, integration, modularization, and computerization. Key R&D technologies include high-efficiency welding (automatic fillet welding, vertical fillet welding, horizontal automatic butt welding), shipbuilding precision control technology, shell coating integrated technology, and computer-aided shipbuilding integrated system technology. Key R&D equipment includes welding robots, CNC machine tools, and large portal cranes. From the perspective of ship demand, large-scale, high-value-added ships and engineering equipment are becoming the focus of competition in the global ship market, including large oil tankers over 200,000 tons, large product tankers over 100,000 tons, large multi-purpose chemical tankers, fully cold LPG and LNG vessels over 5,000 tons, container ships over 5,000 TEUs, large car carriers, engineering vessels, refrigerated vessels, luxury tankers, drilling vessels, etc.
Abrasives and abrasive enterprises should follow the technological innovations of the shipbuilding industry to develop new products and seek breakthroughs, producing high-end abrasives to reduce reliance on imports. It is expected that the next five years' development tone for the abrasives industry will align with the overall national economic policy. The global and regional economic structures are undergoing significant changes. To adapt to the opportunities and challenges brought by economic integration and expanding domestic demand, China's abrasive enterprises are rapidly restructuring, transforming, and upgrading their product structures, increasing their degree of internationalization.
In recent years, abrasive industry enterprises, such as those in Luoyang, Henan, and Danjiangkou, Hubei, have actively enhanced their product grades through relocation and upgrades, achieving notable success. Up to now, many medium-sized abrasive manufacturers have completed relocation and transformation, eliminating outdated equipment and improving their technological equipment levels. The development of economies worldwide increasingly focuses on enhancing scientific and technological capabilities. Market competition primarily reflects in product technology levels. Currently, several prominent abrasive enterprises worldwide are pursuing different paths based on their development philosophies. Their development emphasizes high-tech product starting points and high returns from marketing, aiming to break free from the low- and mid-range product competition circle.