Hajioannou warns expanding Chinese shipyards could create dry-bulk oversupply
Safe Bulkers chief Polys Hajioannou has warned that growing Chinese shipbuilding capacity could outpace dry-bulk demand, even as new vessel prices are expected to rise.
Shanghai, China. Polys Hajioannou, chief executive of Safe Bulkers and president of the Cyprus Union of Shipowners (CUS), has warned that China’s expanding shipbuilding industry risks producing more dry-bulk vessels than the market needs. TradeWinds highlighted his concerns in a report on Friday, following his participation alongside other industry executives in this week’s Capital Link forum in Shanghai.
Shipyard expansion raises supply concerns
Hajioannou’s warning comes despite expectations that prices for newly built vessels will increase further. Shipyards currently have enough contracted work to keep them occupied for several years, supporting prices, but their expansion could create difficulties for shipowners once ordering slows.
The concern is that larger yards will continue seeking contracts after completing their existing backlog, making it easier to order vessels beyond the trading market’s requirements. In dry bulk, which transports commodities including iron ore, coal and grain, each new ship needs cargo. Fleet expansion that exceeds growth in seaborne trade can intensify competition and reduce freight earnings, regardless of construction costs.
BIMCO’s latest data put the worldwide shipbuilding backlog at 203.2 million compensated gross tonnes as of September 1, up 13 per cent from a year earlier. Over the previous 12 months, Chinese shipbuilders won 74 per cent of new contracts; their share of the global orderbook now stands at 64 per cent.
According to BIMCO chief shipping analyst Niels Rasmussen, Chinese yards are scheduled to complete 44 million compensated gross tonnes in 2028, compared with 22.7 million in 2025 — almost twice as much.
Compensated gross tonnage measures construction workload across different vessel categories, not simply dry-bulk cargo capacity. The figures nevertheless indicate the scale of additional shipbuilding output being prepared.
Demand forecasts fall short of fleet absorption needs
An October study from Maritime Strategies International, covered by Riviera, identified a potential gap between dry-bulk ordering and demand.
After accounting for replacement vessels, absorbing ships contracted from 2023 to 2026 would require demand to grow by more than 5.3 per cent annually over 2026–2029, the analysis found. Maritime Strategies International’s forecast was approximately 2.7 per cent.
That difference does not establish that oversupply will occur, but it calls into question how closely current orders reflect underlying cargo needs.
Hajioannou had raised similar concerns at a Capital Link discussion held during Posidonia in June. He said: “If we see yards coming out from nowhere, the situation will change for the worse very fast.”
He characterised his market outlook as cautiously optimistic, rather than expressing confidence that favourable conditions would continue indefinitely.
Safe Bulkers continues fleet renewal
The issue has particular relevance for Cyprus through Hajioannou’s CUS presidency and Safe Bulkers’ substantial operational presence in Limassol.
Safe Bulkers has continued renewing its fleet while preserving the option to commission more vessels or acquire second-hand ships. A September share placement generated €80.4 million for that programme and potential additional acquisitions.
On Thursday, the company received Kypros Island, a methanol dual-fuel Kamsarmax of 81,200 deadweight tonnes constructed at Tsuneishi’s shipyard in China. It is the first ship of this type registered in Cyprus.
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