China has extended the subsidies for domestic shipowners who scrap old tonnage and order new vessels to match the retired tonnage by two years, said a circular of the Ministry of Transport published on 23 June.
In December 2013, the Chinese government unveiled a polished version of the subsidy policy to encourage Chinese shipping companies to scrap aged vessels. The policy aims to reduce glut in capacity and emission cut. Compared with previous policies issued in 2010, the subsidies were boosted 50% to CNY1,500/gt (USD242/gt). To be eligible, vessels have to be China-flagged and dismantled at 37 approved Chinese scrapyards, according to the ministry.
The subsidies, which were planned to expire by the end of 2015, will be doubled if the shipowners order new tonnage at Chinese shipyards to match the retired tonnage.
Since the policy came into effect, Chinese shipowners have jumped at the opportunity to renew their fleet and benefit from the subsidies.
In the first four months of this year, China COSCO scrapped a total of eight container ships and 18 bulk carriers. In January, the company said it would retire 23 vessels of old tonnage of 1.1 million dwt for 2015.
As of late 2014, China COSCO sped up offloading of old tonnage with a total of 56 scrapping of bulk carriers and container ships at 3.1 million dwt, which resulted in government subsidies of CNY1.4 billion.