Shougang unit in US$500m order spree
A HONG KONG-BASED subsidiary of Shougang has finalised US$500 million worth of dry-bulk carrier orders, including one of the biggest Capesize newbuilding projects on record.
The builders involved will be China Shipbuilding Corp of Taiwan, Sasebo Heavy Industries of Japan, and South Korean groups Hyundai Heavy Industries, Samsung Shipbuilding and Daewoo Shipbuilding.
Another more than US$120 million will be spent if options are confirmed, according to Lloyd's List.
The five shipyards share the spoils in the rush to get six Capesize ships completed by the end of 1996. Another 10 smaller bulkers will be built by mainland and Japanese specialists.
The orders for smaller vessels are part of a national fleet renewal scheme, beginning with contracts valued at more than $200 million, in the Handysize sector.
The Capesize programme is based on steel-maker Shougang Steel Corp's expansion plans, which call for huge movements of iron ore and coal.
The vessels are of 180,000 deadweight tonnes (dwt), except for the Daewoo ship, which will be 200,000 dwt. Contracts with Sasebo, Samsung and Daewoo include an option for a further vessel.
The order spree reflects progress towards China's port capability to take the largest bulkers. Modifications are being carried out at Beilun, near Shanghai, to enable it to accept 200,000 tonners.
The decision to spread the orders around Asia has caused surprise because it could stretch supervision capacity. Its advantage is early delivery dates.
The purchases will provide a core fleet for Shougang, although the operator is almost certain to need to continue chartering spot and longer-term on the open market.
Earning about $600 million a year in foreign exchange, the Shougang steel operation has become of key importance in the Chinese economy, along with other major plants including Baoshan, Wuhan and Anshan.
China's crude steel output, at 88 million tonnes annually, is second only to Japan - and there are predictions that it will be the world's largest by 2000.
Japanese trading houses Nissho Iwai and Itochu are reported toe be involved in financing contracts.
Activity has stepped up internationally in Capesize vessel contracting in recent months, with 180,000 tonners attracting about $42 million, and a 200,000 tonner likely to be priced at $45 million to $50 million.
Oak Steamship, Klaveness, Safmarine and Bocimar have been involved in recent ordering.
On the Handymax front, China Ocean Shipping Co (COSCO) has confirmed orders at Japan's Tsuneishi Shipbuilding, and at associated Hashihama Shipbuilding, for eight 45,000 dwt ships of standard design.
Five of the ships are believed to have been contracted through a Hong Kong-registered company, backed by finance from of Nissho Iwai. Delivery will take place throughout 1996.
Guangzhou Maritime Transport Group, has come to terms with Shanghai Shipyard to build two 35,000 dwt ships to a new design, with delivery due next year.
The two self-sustaining vessels are intended for worldwide trading, and will be aimed at the grain and steel-product trade.