Yangzijiang Shipbuilding Holdings Ltd, a large shipbuilding enterprise from China, has reported cancellation of eight shipbuilding contracts in the second quarter of the year due to the clients’ failure to complete payments for their orders.

As reported by the Wall Street Journal, the vessels in question include six dry-bulk carriers with a capacity of 82,000 deadweight tons and two with a capacity of 34,000. The company was able to secure the deposits on the vessels, covering merely 15% of their overall value.

Therefore, Yangzijiang had to resort to other options and it managed to find new owners for the two smaller carriers worth $24 million each and for one of the larger ones. However, the shipyard is still in search for buyers for the remaining vessels.

What is more, the company’s $6.9 billion order book from 2009, the year which saw booming of the shipbuilding industry in China, scaled down to $3.8 billion.

Cancellation is just a drop in the sea of order cancellations prompted by the full swing of the economic crisis and plummeting of the freight rates. The situation is becoming ever more difficult with the surging operating costs that keep diminishing the profit.

Based on market observers’ projections the overcapacity in China’s shipbuilding is about to be cut, since between 30% to 50% of shipbuilders, including manufacturers of oceangoing vessels, are most likely heading toward bankruptcy due to a major fall in demand for new-build vessels. The solution is seen in consolidation of sky-rocketing number of shipyards that emerged on the market over the last couple of years.

“Consolidation of the shipbuilding industry is still under way and we do expect the near future to be a challenging one considering the global uncertainties and growing market competitiveness,” Yangzijiang Executive Chairman Ren Yuanlin said in a written statement.