Shipping Corp. to buy 4 cargo vessels from S. Korea’s STX

Shipping Corp. to buy 4 cargo vessels from S. Korea’s STX
Comment E-mail Print Share
First Published: Thu, Apr 10 2008. 11 01 PM IST
Updated: Thu, Apr 10 2008. 11 01 PM IST
Delhi: The state-run Shipping Corp. of India Ltd (SCI), India’s biggest shipping firm by fleet size and revenues, is set to buy four cargo ships from South Korea’s STX Shipbuilding Co. Ltd for $239.80 million (about Rs960 crore).
STX emerged the lowest bidder in a global tender called by SCI, for which the price bids were opened on 4 April. STX quoted a price of $59.95 million for each ship, while the only other bidder, SPP Shipbuilding Co. Ltd, also of South Korea, quoted $61.38 million per vessel, said a person who has knowledge of the price bids.
“STX has been declared as the lowest bidder and a formal agreement will be signed after SCI gets board approval and clearance from the Union cabinet committee on economic affairs,” said the person, who did not want to be named because the deal has not been made public yet. An SCI spokesperson declined comment.
The company will place orders for four Kamsarmax-type dry bulk cargo carriers that can load up to 82,000 tonnes of cargo each. A bulk carrier, or bulker, is used to transport unpackaged bulk cargo, such as cereals, coal, ore and cement.
The Mumbai-based firm has till date ordered 28 new ships worth more than $1.64 billion at various global yards to replace some of its ageing fleet that have to be decommissioned in line with global maritime regulations.
For STX, this would be the second big order in recent months from SCI, which had, in December, placed orders for six new handymax carriers for $269.4 million. Handymax carriers are smaller bulk carriers, typically capable of loading 35,000-60,000 tonnes.
STX, the world’s sixth biggest shipbuilder by order size, is also building another six tanker ships for SCI that can carry as much as 73,000 tonnes each of petroleum products.
SCI, in which the Indian government owns 80.12% stake, also plans to acquire four capesize vessels and recently floated a global tender for them. Capesize cargo ships are so huge that they cannot negotiate the Suez or Panama Canals, and must traverse either the Cape of Good Hope or Cape Horn. Such vessels can typically carry as much as 175,000 tonnes of cargo, and are the largest vessels capable of carrying dry bulk goods.
SCI is buying bigger ships that can load more dry bulk cargo to cash in on the booming demand for carrying raw material across the seas.
A capesize ship currently fetches a day rate of about $120,000 for its owner when it is hired for one year, while a Kamsarmax carrier earns around $65,000 a day.
SCI currently owns and operates 20 dry bulk carriers. These are mostly of the handymax class. Shippers, however, prefer bigger ships to transport larger quantities of cargo in a single trip.
“The bigger the ship, the lower the unit freight cost,” said S.N. Srikanth, founder and senior partner at maritime consultancy firm Hauer Associates. Dry bulk cargo carriers account for a significant percentage of the global shipbuilding order book. “It accounts for about 53% of the existing global dry bulk shipping fleet,” said S. Hajara, chairman and managing director of SCI. This indicates the huge demand for such ships globally, he added. A lot of power projects are coming up in India in the next couple of years and there will be a huge demand for such vessels to carry raw materials such as coal, used to fire the power plants, said Umesh Grover, a director looking after the technical and offshore business of SCI.
Apart from smaller size, SCI’s dry bulk carriers get lower rates as most of them are older ships. The firm has a bigger presence in the tanker market.
Comment E-mail Print Share
First Published: Thu, Apr 10 2008. 11 01 PM IST