Brazilian iron ore miner Vale  has ordered a dozen of the largest class of ore carriers from a Chinese shipbuilder for $1.6 billion.

Vale, the world’s largest iron ore miner, expects the huge vessels to reduce shipping costs and make its ore more competitive with nearer Australian and Indian ore for the fast-growing Chinese steel industry, already the world’s largest.

Vale said it ordered 12 very large ore carriers from Jiangsu Rongsheng Heavy Industries, each with a capacity of 400,000 deadweight tonnes. Delivery of the first is expected in early 2011 and the order is due to be completed by 2012.

The carrier program adds to Vale’s previously announced global investment
program of $59 billion for 2008-12, as it aims to boost iron ore output by
50% to 450 million tonnes by 2013.

Vale plans to ship more than 100 million tonnes of iron ore to China in 2008 under term contracts, a rise of 10% from 2007. (The illustration is of one of the massive engines it uses to transport the ore.)

China’s crude steel output this year is forecast to rise about 10% to 550 million tonnes.
Source: Reuters

Chinese shipbuilders are now a major world force. This is because they have the world’s major market in the place where they work. And, at the same time, intitial public offerings, IPOs, have become favorite ways to financing expansion and letting the originators get their hands on some of the loot. Thus it comes as no surprise at least seven Chinese shipbuilders are planning share offerings, IPOs.

In a sense this underlines China’s efforts to build up its domestic fleet but it also shows it wants to branch out into the construction of more advanced vessels.

Probably the largest of the anticipated initial public offerings is likely to come from state-owned China Shipbuilding Industry Corporation (CSIC). (You can asked the question as to whether a state-owned company that has an IPO remains under state control. It is an interesting question and you can see such a battle for power being fought out in Australia where the national telecom compay, Telstra, has gone public and is acting in ways in which the government is not comfortable, not comfortabke at at.

CSIC wants to raise about $900 million on the Chinese mainland A-share market. The other major state-owned shipbuilder, China State Shipbuilding Corporation (CSSC), is considering a share sale in Hong Kong.

Meanwhile, five privately owned shipbuilders – Jiangsu Rongsheng Heavy Industries, Sinopacific, Mingde Nantong, Yantai Raffles Shipbuilding and JES International – are apparently also looking to sell equity in order to fund their expansion. This is confirmed by Sinopacific and Mingde although no details ae offered.

In a sense these IPOs cannot lose.

The Baltic Dry Index, a key measure of commodity shipping costs, has more than doubled in the past year.

Gilbert Feng, assistant director of the Hong Kong Shipowners’ Association, who visited China’s two major state-owned shipbuilders, said: ‘New building orders are already full until 2010, so their executives certainly sound very confident.’
China recently overtook Korea, the world’s leading shipbuilding nation, for the first time in terms of one specific measure – first-half ship orders in terms of deadweight tonnage. CSSC’s goal is to double its shipbuilding output over the five years to 2010.
Source: Financial Times

The first 8,530-TEU container ship — a totally designed and created Chinese ship — has been delivered to China Shipping Container Lines and has left for its maiden voyage to the United States.

It has made China the fourth country in the world, after the Republic of Korea, Japan and Denmark that is able to design and build such giant container ships.

The ship, named New Asia, is one of a group of five container ships of the same type designed and being built by Hudong-Zhonghua Shipbuilding for China Shipping Container Lines.

The 101,000-dwt container ship, 335 meters long and 42.8 meters wide, can reach 25 knots and is the start of a fleet.

The Shanghai-based shipbuilding company spent six years build this first ship, the largest container ship independently designed and built by China. Now the company has confirmed nine orders for its 8,530-TEU container ships, including four for the Greek Costamare Shipping Company.

Our illustration is NOT of this boat but of a similar container vessel. It was built by Samsung Heavy Industries for China Shipping Container Lines and is a 9,600-TEU series mega carrier. Note that this is in the megacarrier class yet only carries about 1,000 more containers than New Asia. And this particular ship is reported as having ‘topped a speed of 25.4 knots, very impressive for a ship of this magnitude to reach.’ So New Asia is both fast and large and destined for success.
Source: China View

Shares in Asian shipping companies are starting to stagnate because of concerns that rising costs could hurt earnings.

China Cosco Holdings, owner of the largest Asian container line, has seen its shares fall 25% this month from a record high July 31.

Neptune Orient Lines, which operates the region’s fourth-largest container line, has dropped 34% since peaking last month. Its costs will rise 1% in the second half, twice as fast as in the first, as fuel prices rise.

Alex Chang, an analyst with UBS in Hong Kong is not optiministic. Energy costs have jumped more than 30% this year and surcharges to move containers in and out of ports are rising, undermining shipping lines’ efforts to stem two years of profit declines. The companies are also paying more for vessels as shipbuilders charge higher prices because, paradoxically, of a flood of orders. Orders are made long before any market variations can be intelligently predict.

The 20 biggest Asian container shipping lines by market capitalization are valued, on average, at 30 times earnings. That exceeds the average multiple of 21 for the Bloomberg World Transportation index of 108 companies.

The price of ship fuel climbed to a record high last month after crude oil reached the highest level in more than 11 months. The prices are increasing largely because of demand from China. According to Mirae Asset Securities in Seoul bunker fuel costs make up as much as 15% of a shipping line’s total expenses.
Source: International Herald Tribune

China Shipping Container Lines will spend $1.36 billion adding eight 13,296 TEU vessels to its fleet by 2012. The Hong Kong-listed line ended the first half of the year in a strong financial position. It reported a jump in first half net profit to $152 million through the robust China trade and the addition of more than 28,000 TEU capacity.

Intra-Asia trade grew 45% over the same period last year, with CSCL handling 627,868 TEU in the first half.
The domestic China market grew 36.7% with 1.1 million boxes.
Three 9,600 TEU vessels were delivered in the first six months, increasing the group’s container capacity to 427,107 TEU.

Li Shaode, CSCL chairman, told investors that China’s throughput had reached 52.53 million TEU, a growth of 24% in the first half.

He said global shipping capacity was set to grow by 15% this year but would be balanced by the offsetting influence of trade imbalances, longer trade routes tying up vessels and emerging markets absorbing excess capacity.
Source: CargoNews Asia

China’s second largest shipping conglomerate, Shanghai-based, China Shipping Group, plans to build ships by the end of next year.

t the moment its six current yards, situated in Shanghai and Guangzhou, are limited to ship repairs, ship conversions and hull maintenance.

Now ground for a new shipyard has already been broken in the Yanjiang Development Zone of Jiangdu in east China’s Zhejiang Province. It will cover an area of 187 hectares and stretch 3,500 meters along the coastline. The illustration shows a naval ship built by Jiangnan Shipyard, one of China’s major shipbuilders. China is the world’s third biggest shipbuilder in terms of output.

China Shipping Group plans over a period of three years to expand the plant so that it can have an annual production capacity of 1.5 million deadweight tons.

This is the second time in less than two months that a major centrally-administered state-owned enterprise has branched out into shipbuilding.

In March, the Shanghai Baosteel, China’s largest steel producer, jointly invested RMB10 billion ($1.3 billion) with China State Shipbuilding Corporation to build the country’s largest shipbuilding base at the estuary of the Yangtze River.
Source: Marine Log

COSCO, China’s leading shipping and logistics service provider, is going to use four domestic shipyards to build 66 ships. Zhang Fusheng, a COSCO spokesman said the cost was a record amount for the shipping giant although he did not give precise details.

Wu Bangguo, Chairman of the Standing Committee of China’s National People’s Congress, attended the signing ceremony on the sidelines of the annual conference of the Boao Forum for Asia.

The 66 ships — including container ships, bulk cargo ships, oil tanker and car carriers — will have a total deadweight tonnage of 5.14 million.

They will be built by four domestic firms, including China Shipbuilding Industry, COSCO Shipbuilding Industry and COSCO Shipyard Group (which keeps a lot of it in the family) and will be delivered between 2008 and 2010.

COSCO currently owns 740 ships, with a total capacity of 46 million dwt.
Source: China View

Last year China maintained its position as the world’s third-biggest shipbuilder, a rank it has held for 12 consecutive years. Ship export volume surged 74% to $8.11 billion.

Two leading domestic shipbuilders, Dalian Shipbuilding Industry and Shanghai Waigaoqiao Shipbuilding became world top-10 shipbuilders, joining a list that was before the sole domain of Japanese and South Korean companies.

Nie Lijuan, managing deputy secretary-general of China Association of National Shipbuilding Industry, said, ‘China’s position as the world’s third-largest shipbuilder is totally different from that 10 years ago. The country has significantly improved its shipbuilding competitiveness.’

Chinese shipbuilders produced 14.52 million deadweight tons last year, nearly 20% of the world’s total, compared to only 6% in 2000. Types of made-in-China ships have developed from conventional bulk carriers and crude oil tankers into high value and sophisticated vessels, such as very large crude carriers (VLCCs), liquefied natural gas carriers and high-speed container ships.
Source: China Daily