Jinhui rushes to add to fleet amid boom

PUBLISHED : Thursday, 24 February, 2005, 12:00am
UPDATED : Thursday, 24 February, 2005, 12:00am

The Oslo-listed arm of Jinhui Holdings yesterday agreed to pay more than $530 million for two relatively new Handymax vessels from Greek interests as the bulk shipping industry continued to see strong demand for capacity to transport raw materials.

Jinhui Shipping and Transportation will pay US$34 million for each of the 50,212-deadweight-tonne sister ships from Allied Maritime, which will be delivered by the end of June.

'The price is in line with the present market rates,' said Martin Rowe, a director at brokers Simpson Spence and Young. 'It is well in excess of what they would have cost to build, but it is a very firm market right now.'

It is thought Jinhui management paid a premium to secure earlier delivery of the vessels while the market remains at or near its peak.

Jinhui will take possession of the vessels far sooner than it could have from prospective shipbuilding yards. Delivery slots at Asia's leading yards are effectively full for a least the next two years and shipbuilders are reluctant to book orders for the smaller, less profitable Handymax size of vessel.

Jinhui is to pay a 10 per cent cash deposit on the purchases, with the remainder paid on delivery of the vessels, the Progresso Dos and the Futuro Dos. The purchase expands Jinhui Shipping's bulk fleet to 11 vessels, with five further ships on order at Asian shipyards, for delivery by 2007.

The parent is better capitalised than it has been at any time since the turn of the millennium. Jinhui Shipping this week released unaudited results indicating net profit more than tripled last year to US$50.42 million.

Sales, largely driven by China's appetite for raw materials such as iron ore, coal and grains, more than doubled to US$216 million.

Shares in the Hong Kong-listed parent were suspended from trading yesterday pending the announcement.