China Rongsheng targets 6-month orders of US$1b

PUBLISHED : Thursday, 25 August, 2011, 12:00am
UPDATED : Thursday, 25 August, 2011, 12:00am


China Rongsheng Heavy Industries will focus on winning more new ship orders from mainland shipowners in the second half of this year to offset a possible drop in orders from the West.

Chief executive Chen Qiang yesterday said the mainland's largest privately-owned shipbuilder aimed to win US$1 billion worth of shipbuilding deals between July and December. In the first half of this year, the company won US$1.3 billion worth of new contracts for 28 ships.

'The company will focus more on the mainland market in the second half of this year,' Chen said. As the volume of new deals in the second half is usually higher than in the first six months 'we are confident that we can easily achieve our target', Chen said.

In the second half of the year, the shipbuilder has only clinched an order in July to build up to four 6,600 teu (20-foot equivalent unit) containerships for a European shipowner. There has been no order this month because of the holiday season. Chen declined to disclose the value of the containership order, although ship brokers estimate the deal at about US$260 million for all four ships.

In the first half of this year, the shipbuilder posted a 639 per cent jump to 1.2 billion yuan (HK$1.5 billion) from a year ago as revenue rocketed 81.1 per cent to 8.7 billion yuan. Mainland customers accounted for about 30 per cent of the shipbuilder's revenue, Chen said.

The firm had a total order backlog of 109 ships totalling 17.36 million deadweight tonnes (dwt) with a combined contract value of US$6.75 billion up to the end of June.

The first of twelve 400,000 dwt large ore carriers ordered by Brazilian iron ore miner Vale would be delivered in September after being christened in July, Chen said

Another one or two of the Vale-ordered ships could be delivered by the end of the year, although negotiations between Vale and the shipbuilder could see delivery shift to early next year.

Chen said China Rongsheng would not be penalised if the ships were delivered late. He was also confident that future sister ships could be delivered early so Vale's overall newbuild programme would be unaffected.

He confirmed the shipbuilder was also in discussions about further potential co-operation with Vale that could see additional orders for large dry cargo bulk carriers, but no details had been agreed.

Chen noted that Vale was under the Brazilian government's instructions to order ships from Brazilian shipyards. As a result, China Rongsheng could build the ore carriers for non-Brazilian owners, which would charter the vessels to Vale.