Chinese shipyards are caught in deadlock as shipping markets see an oversupply from the 2002-2008 shipping boom, Financial Times reports.

China Rongsheng Heavy Industries, one of China’s biggest shipbuilders, announced that orders in the first half of 2012 year plunged to $58m from $725m in the same period. According to Clarkson, orders worldwide in the first half sank 46%. Shipowners fear that shipyards will cut prices to boost orders and worsen the oversupply, while shipyards fear that the oversupply could lead to a further slump.

Head of shipping for Norway’s DNB Bank, Herald Serck-Hanssen, said that slashing prices could hold up the market in a short time. However, he also said that “there are too many shipyards for any forseeable future”. A Hong Kong-based analyst told the FT: “In China, where there is serious overcapacity, many shipyards have had no work all this year”. China is one of the world’s largest shipbuilders and builds oil tankers, dry bulk carriers and container ships.