South Korean shipbuilder STX Shipbuilding Co. Ltd has won orders to build 14 new ships, worth more than $750 million (about Rs2977.5 crore), from Indian shipowners who are buying new cargo carriers to cash in on the growing global demand for carrying raw materials such as steel, iron ore and coal.
The companies buying the ships are the state-run Shipping Corp. of India Ltd (SCI), Essar Shipping & Logistics Ltd and Great Eastern Shipping Co. Ltd.
SCI, India’s biggest shipping company, will sign a contract with STX in New Delhi on 4 December to build six dry bulk cargo carriers, each with a cargo carrying capacity of 57,000 tonnes. At a price of $44.9 million per vessel, the six ships will cost $269.4 million to build, said Umesh C. Grover, director, technical and offshore services division at SCI.
STX’s headquarters in Seoul. The company has won orders to build 14 ships from shipowners, including state-run SCI
The ship purchase was cleared by the Union government’s cabinet committee on economic affairs at a meeting held on 29 November.
The new ships will be built at STX’s Dalian facility in China and deliveries to SCI will start in 2011.
STX won the SCI order beating Chinese shipbuilder Jinling Shipyard, a unit of state-owned China Changjiang National Shipping Corp.
Essar Shipping, part of the Essar Group, has placed an order with STX for building six bulk carriers, according to an executive at STX, who did not want to be named ahead of an official announcement on the deal. Each of these vessels can carry as much as 98,000 tonnes of dry bulk commodities. At a price of $63 million for each ship, the six vessels will cost $378 million to construct. These ships will also be built at Dalian and will be delivered to Essar beginning the second half of 2011 or January 2012.
Essar is expected to announce the deal officially in the next few days. A company official declined to comment.
Great Eastern Shipping, India’s biggest private sector shipping company by fleet size and revenues, in October had ordered two dry bulk carriers from STX, each with a cargo carrying capacity of 80,700 tonnes. These vessels will be delivered to Great Eastern between February and April 2011.
The dry bulk carriers that SCI will order at STX are called Handymax carriers, which can typically carry as much as 60,000 tonnes of dry bulk cargoes, including iron ore, coal, grain, cement and fertilizer along worldwide shipping routes. The new vessels will partly replace about 14 old Handymax vessels owned by SCI that are due for scrapping in the near future.
“Handymax carriers are India’s workhorse. These type of ships are the clear beneficiary of the economic trade boom in India,” said Peter Malpas, group manager, research, Australia and Asia at the London Stock Exchange-listed shipbroking firm, Braemar Shipping Services Plc. Handymax vessels carried 58% of the cargo coming into and moving out of India in the 12 months through March 2007, he added.
A Handymax carrier currently fetches a rate of about $65,000- 70,000 per day for its owner in the spot market. For long-term charters of one year, the rate is about $50,000 a day.
State-owned steel maker Steel Authority of India Ltd imports all its coking coal used for firing its plants on Handymax carriers owned by SCI and other shipowners.
A global shortage of ships has increased the cost of shipping raw materials across the world, raising the cost of commodities such as coking coal, thermal coal, grains and iron ore. “The freight rates for moving dry bulk commodities have risen by almost three to four times in the last one year across all routes,” SCI’s Grover had said in an interview earlier.