China Rongsheng Heavy Industries signs shipbuilding contract
May 27, 2014 Category Logistics, Ports & sea transport
China Rongsheng Heavy Industries Group Holdings, one of China’s biggest shipbuilders, signed a USD1 billion contract with a European shipowner to build up to 36 bulk carriers within the next three years, thanks in part to a strong global shipping market. Of the total, 24 are confirmed orders and 12 are optional so that the shipowner can buy them at a fixed price in the future to hedge against unpredictable spikes in ship prices. The buyer can also choose not to buy if shipping rates go down. Among the 24 confirmed orders, 18 were signed by Rongsheng last year at a lower price, but the terms were renegotiated at a higher order price given the robust status of the dry bulk shipping market. Rongsheng refused to disclose the identity of the buyer. In the first quarter, new orders by Chinese shipbuilders have grown 170% from a year earlier, among which 96% were from foreign buyers, according to the China Association of the National Shipbuilding Industry. All the 36 ships to be delivered are dry bulk carriers of 64,000 DWT. According to Clarkson Research, Rongsheng is the world’s third-largest shipbuilder and the largest in China in terms of orders on hand at the end of December 2012. The company reported a loss of CNY8.7 billion for last year.
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