China's shipping industry is likely to remain sluggish in 2016 due to low demand and overcapacity.

Many shipping companies here in China have released financial forecasts, saying they could lose billions of yuan due to the gloomy global shipping market and the slowing domestic economy.

Zhang Yongfeng, director of the Shanghai International Shipping Institute, says Chinese demand for raw materials continues to drop.

"It's primarily a demand issue. The demand in the shipping market has been shrinking over the past few years. The demand has also changed a lot, which has been affected by China's slowing economic growth."

With the situation worsening, Zhang says many shipping companies might be forced out of business.

"We predict that many shipping companies will close in 2016. Some may choose to merge and reorganize, while others may exit the market."

Meantime, figures show the supply of new cargo ships has been on the rise.

The total container capacity of the world's idle shipping jumped five times last year.