Singamas container output rebounds

Singamas Container Holdings, the world's second-largest container maker, has seen box manufacturing rebound to almost 2007 levels following the recent recovery in global trade volumes.

The Hong Kong-listed company said its 12 mainland factories were producing about 65,000 20-foot equivalent units (teu) a month.

This would give an annualised output of 780,000 teu against 838,638 teu at the height of the shipping boom in 2007 and compared with 86,600 teu for the whole of last year.

As a result, the company is on course to return to the black for the first half of this year.

The firm, which is due to report its interim results next month, has not quantified the likely level of net profit. It reported a US$51.9 million net loss for last year following an 80.2 per cent plunge in revenue to US$274.6 million.

Singamas president and chief executive Teo Siong Seng said: 'All our factories are full until the end of September and are now booking for October.

'From the fourth quarter of 2008 until early this year, most of the shipping lines and leasing companies stopped buying new containers. When the economy rcovered and exports in China increased, the demand for containers became very strong.'

Trade volumes have rebounded on all major trade lanes within Asia and from Asia to Europe and North America.

Figures from the European Liner Affairs Association, which represents shipping lines operating on Asia-Europe routes, have shown a steady increase in Europe-bound cargo volumes since the beginning of this year with a 21 per cent increase to 1.13 million teu in May.

Container shipping lines have also cut the speed of their ships from about 24 knots to between 17 and 14 knots to reduce fuel consumption and soak up excess tonnage.

The move has cut the number of containers available for exporters by about 20 per cent, which shippers fear will create a shortage as they head into the peak demand season starting this month.

Teo said that for Singamas the average selling price of a 20-ft dry freight container had surged to US$2,700 for August delivery, up from US$1,850 in the same period last year.

But he said that material costs, especially for the special Corten steel used to make the containers, were on course to rise. About 1.8 tonnes of steel is used in a 20-ft unit.

'Although steel prices have come down recently due to the measures imposed by the Chinese government to control fixed asset expenditure, the Corten steel price, due to strong demand from container manufacturers, remain fairly stable. With the rising iron ore price, the price of Corten steel may increase in the next few months,' Teo said.

The resurgence in demand has also made it difficult to recruit sufficient workers and increase production capacity in such a short period of time especially as the company slashed 6,000 jobs last year.

'We had retrenched half of our workers and lost quite a few of the remaining ones due to the long shutdown last year,' Teo said.

Most of the remaining workers 'only received minimum wages last year as our production volume was extremely low'.

The company is now operating an extended single shift to keep up with demand at its mainland plants which include facilities at Shunde and Huizhou in Guangdong. It has no plans to resume production at its factory in Surabaya, Indonesia.