China Rongsheng Heavy Industries inks 3 European shipbuilding deals

The US$400mn deals raised amount of the Group’s new orders in the 1H2011 to more than US$1.3bn.

China Rongsheng Heavy Industries Group Holdings Limited (“China Rongsheng Heavy Industries”), a large heavy industries group in China, announced that it has secured large orders from three renowned shipowners in Europe recently, including four 6600-TEU containerships and ten 205,000-tonne bulk carriers, according to a China Rongsheng Heavy Industries report.

Mr Chen Qiang, Chief Executive Officer and Executive Director of China Rongsheng Heavy Industries, said, “We have secured the highest number of new orders in the country and the world’s fifth highest number of orders in hand since the end of 2010. Following the order[s] valued at USD400 million secured in the first quarter this year, we have secured several additional large orders which have notably increased the total amount of our orders in hand. These orders are sufficient to support our development in the coming few years, forming a solid foundation for our future growth. The signing of the contracts has increased the amount of new orders of the Group in the first half of the year to more than USD1.3 billion and further rationalised our order structure”.

The Group signed a contract with a renowned shipowner in Europe on 26 June in relation to ten 205,000-tonne bulk carriers. The contract is one of the few large orders in China in the first half and enhances the confidence of the international market in the country’s shipping enterprises. This order is for a new vessel model developed by the Group to be built to the specifications of the shipowner. The shallow draft vessel model is able to stop at many other ports including ports in Australia and Brazil in the world. It also boasts the low oil consumption of less than 60 tonnes of heavy oil per day which helps to save transportation costs.

At the same time, China Rongsheng Heavy Industries has signed contracts with two other European ship owners to provide each with two 6600-TEU containerships [respectively]. Adopting a new generation design, the 6600TEU containerships reduce the speed from 25 kn to 21 kn as well as [ballast capacity], thus saving oil consumption and lowering transportation cost.

The vessel model of these three contracts is an environmentally friendly type developed by the Group to meet international markets demand. NOx and SOx emissions have been reduced to comply with the Tier II emission standards of the International Maritime Organization (IMO). In the existing market, more shipowners are requesting shallow draft vessel models with low oil consumption and cost effective operation. Environmentally friendly vessel models with low emissions better suit the latest international standards and market trend, thus making this version more popular in the market.

Despite the slowdown in the global shipbuilding industry in the first half of the year, China Rongsheng Heavy Industries has stood out among its peers in the volume of new orders it has secured. This year, the Group has signed contracts with Golden Union, a well-known international shipowner, for provision of two Panamax bulk carriers in January, and 2+2 of these carriers in May. Founded in 1977, Golden Union is well-known for operating bulk carriers. Currently, Golden Union has more than 20 ships in its fleet, thus making it the leader in the dry bulk carrier transportation [industry] in Greece.

In addition, in the first quarter of this year, the Group has secured the order of 10 Panamax bulk carriers from Minsheng Financial Leasing (MSFL), the largest financing leasing company in China. It is worth noting that MSFL has granted 28 orders with total contract value of more than USD1 billion to the Group since last year. This batch of bulk carriers will be used to deliver coal in the coastal waters of China by several domestic large coal-fired power plants such as Huadian and Guodian. The first vessel will be christened and delivered in July this year.

With these new orders, to date this year the Group has secured commitments to make 24 bulk carriers and four 6,600-TEU containerships, totaling around 3.45 million DWT, a gain of around 50% from the same period last year. Total contract value of these orders has exceeded USD 1.3 billion, representing an increase of more than 30% from the same period last year.

In recent years, the Group has placed equal attention on domestic and overseas markets, so as to consolidate its leading presence both in the global market and China. Besides, to meet the requirements of markets, the Group has also enhanced its R&D capability and undertook appropriate preparation for containership, which explains why it has grown into a strong competitor in this field.