China has extended its ship scrapping subsidy program for two more years, the country’s transport ministry informed.
Under the program, shipping companies are encouraged to demolish older vessels with the aim of cutting vessel overcapacity and modernizing their fleets with modern eco-friendlier counterparts.
China launched the program in 2013, offering companies 1,500 yuan (USD 241.67) per gross ton to dismantle oldies.
The subsidies for scrapping of older tonnage have proved to be a much needed lifeline for the country’s shipping companies such as China COSCO and China Shipping Development that managed to stay profitable in 2014.
The scheme was set to expire this year.
However, even though considerable capacity was sent for demolition, Chinese scrapping yards, which were the preferred option under the scheme, are yet to recover from the slumping market conditions as majority of them have still recording losses over the recent period.
World Maritime News Staff