China's two largest shipbuilders are set to merge, forming one of the biggest shipping companies in the world, according to separate exchange filings made Monday.
Eight listed firms under China Shipbuilding Industry Corp (CSIC) and China State Shipbuilding Corp (CSSC) announced in separate stock filings on Monday that their parent companies were planning a strategic reorganization.
According to China Central Television, the final details of the planned merger have not yet been confirmed, with the plan awaiting final approval from relevant authorities.
Two ships under construction at the Jiangnan Shipyard, Shanghai, March 2019. /VCG Photo
The eight subsidiary firms have a combined total market value of more than 250 billion yuan (36.4 billion U.S. dollars), with China Central Television reporting that a merger between CSIC and CSSC could see that total value exceed 500 billion yuan, making the company the biggest shipbuilding firm in the world by market value.
The two state-owned groups were originally one company until 1999, when they were split into two parts.
According to the China Association of National Shipbuilding Industry (CANSI), 2018 saw China build 43.2 percent of the new ships in the world, an increase from 41.9 percent the year before.
However, according to Xinhua, sluggish global demand has seen a notable fall in business orders so far this year.
The first quarter of 2019 saw a 5.8 percent drop on the CCI, a monitoring index which indicates China's shipbuilding capacity utilization efficiency.
CANSI told Xinhua that it expected a slight uptick in new orders, but sagging demand and rising costs would continue to put China's shipbuilding sector under pressure in 2019.