Weak demand fails to dim Sinotrans ambitions

Sinotrans Shipping said it will seek to expand its fleet in the second half of the year despite persistent sluggish demand and slumping profit.

Li Hua, general manager of the Beijing-based company, which owns the largest dry-bulk fleet on the mainland, said the company would look to buy different types of dry-cargo ships, including the 55,000-deadweight-tonne (dwt) Supramax or the 82,000 dwt Kamsarmax with more fuel-efficient engines.

"China's economy may be slowing but imports remain robust, especially coal and iron ore," Li said. "In the long run, import volumes should at least remain stable."

Although the International Monetary Fund expected the mainland's gross domestic product to slow to 7.7 per cent next year, that for the United States is expected to jump to 2.7 per cent while the euro-zone area, which has been in a recession for the past two years, should see 0.9 per cent growth.

Li would not specify how many ships Sinotrans targeted to buy but said the company maintained a long-term goal to double capacity to five million and seven million dwt from 3.31 million dwt. The firm has US$920 million in cash.

Sinotrans maintained a net profit of US$1.61 million for the first half of the year by disposing of four old vessels. That represented a sharp year-on-year fall of 92 per cent but still beat other industry players, including Orient Overseas (International) and Pacific Basin Shipping, which posted a deficit of US$15.3 million and a meagre profit of US$300,000, respectively, over the same period.

Chairman Zhao Huxiang said: "The group managed to mitigate the adverse impact brought by the flagging market by leveraging on our low-cost advantage, improving our business model and optimising our fleet structure."