China's shipbuilding industry - one of the world's largest - has shrunk dramatically over the past year or so, dwindling to just 30 or 40 yards operating regularly, or about 20 per cent of total yards.

The grim news, driven by weak trade and the long period of very low oil prices, came from Singapore-listed Yangzijiang Shipbuilding (Holdings), China's largest privately owned shipyard.

Its executive chairman Ren Yuanlin told a press briefing yesterday the other companies are either facing delays, temporarily shut - or have been wound up.

"The shipping and shipbuilding industry hasn't bottomed out yet due to certain conditions - the economy has not recovered, and there is still overcapacity. Falling oil prices are also not conducive to market recovery," said Mr Ren, who does not expect a recovery this year or next.

Total new shipbuilding orders around the world crashed 67 per cent from last year to 17.7 million deadweight tonnes (DWT) in the first half of this year, said China shipping news site Eworldship.com.

As a result, outstanding global shipbuilding orders are at the lowest level since June 2013, a Clarksons report noted.

Mr Ren noted that the company has laid off about 4,000 staff this year while a further 500 staff are on paid leave till the market improves. About 90 per cent of the retrenchments involved lower-level staff or contract workers. Previously, the firm had about 20,000 staff.

On overcapacity, he said while scrapping ships would help, there is little motivation for shipping companies to do so as the values are low.

"However, scrapping activities are gathering pace and happening faster than new ships are being built," he noted.

In the second quarter, three more shipbuilding orders were terminated although the production of all three vessels had not started yet.

In instances where customers wish to cancel, the down payment is forfeited to Yangzijiang, or the company can change the order in terms of vessel type or delivery date.

If production has started, the company will keep on building the vessel and then resell it. "We don't have much difficulty reselling; the problem is how much we can resell it for," said Mr Ren, adding the firm might get about 10 per cent less in such a case. Seven of eight of the company's orders terminated in the first quarter and one of two orders terminated last year found new takers in the second quarter.

Yangzijiang yesterday posted a 60 per cent slump in second quarter net profit to 415.4 million yuan (S$84 million), on the back of a 48 per cent slide in revenue to 2.99 billion yuan.

Quarterly earnings per share was 10.84 fen, down from 26.9 fen a year earlier. Net asset value was 570.13 fen as at June 30, up from 568.90 fen as at Dec 31 last year.

Its outstanding order book was US$4.7 billion (S$6.3 billion) at the end of June, comprising 89 vessels which will optimise its yards' facilities up to about 2019. Its yard utilisation rate is about 80 per cent, Mr Ren said. "Our focus now will be not so much on bulk carriers but more on container ships and some specialised vessels."

Ocean Shipping Consultants director Jason Chiang said container ships could recover earlier. "For bulk carriers, as coal, grain and iron ore prices are down, volumes have fallen and you don't see demand for new ships. The bulk carrier sector is also fragmented, compared with container ships where there are fewer players and there can be a concerted effort to reduce capacity."

The counter closed 0.5 cent lower at 87 cents yesterday.