China’s Yangzijiang Wins $510 Million Ship Order Amid Weak Demand

Credit: Yangzijiang Shipbuilding

By Kyunghee Park

(Bloomberg) — Yangzijiang Shipbuilding Holdings Ltd., China’s biggest private shipbuilder, won a $510 million order to build six very large iron ore carriers to haul the commodity from Brazil.

Each vessel will have a capacity of 400,000 deadweight tons and are scheduled to be delivered from 2018 to 2019, the shipbuilder said in a statement to the Singapore stock exchange Wednesday. The ships, built for ICBC Leasing, are part of 30 such vessels that Chinese shipowners have placed to transport iron ore from Vale SA, Yangzijiang said.

Yangzijiang shares rose the most in more than a month as the orders may help provide some relief to shipbuilders in China amid shrinking demand for new vessels in recent years because of weakening economic growth. The country’s builders have sought support from the government as excess capacity led to lower shipping rates and prompted some of their customers to cancel orders.

Yangzijiang climbed 3.2 percent to close at 98 Singapore cents, the largest gain since March 4. The stock has fallen 11 percent in Singapore trading this year.

The bulk shipping unit of China Cosco Shipping Corp. won a 27-year contract to carry 16 million tons of iron ore a year for Vale, the companies said in March.

ICBC Leasing, one of the largest ship owners in China, is a wholly owned subsidiary of state-owned commercial bank Industrial & Commercial Bank of China Ltd., according to the statement.

© 2016 Bloomberg L.P

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