Published May 20, 2009

Yangzijiang deliveries unaffected by changes

It recently agreed to two requests for vessel type change

By VINCENT WEE

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CHINA-BASED Yangzijiang Shipbuilding (Holdings) reported that its delivery schedule has been on track with 11 vessels worth US$445.9 million delivered so far this year, even as it helps customers ride through the downturn.

Mr Ren: Yangzijiang will remain proactive and work with its customers to safely cruise through this turbulent phase It recently agreed to two requests for vessel type change

The group has recently accommodated two requests for change of vessel type - from two 1,350 twenty-foot equivalent (TEU) container ships to three 13,000 deadweight tonne (dwt) dry bulkers, and from two 4,250 TEU vessels to two 92,500 dwt vessels.

Yangzijiang has been taking a pre-emptive approach to potential order cancellations as credit worries continue to dog shipowners.

Fellow Chinese shipbuilder Cosco was hit earlier this month with an order cancellation and delivery reschedulings on two ships out of an order for four 57,000 dwt bulk carriers.

Yangzijiang had previously highlighted that it would have an increased focus on project execution to ensure the smooth and timely delivery of the vessels.

'These deliveries reiterate that commitment,' it said, adding that for the rest of the year, another 29 vessels are due to be delivered and the group is confident of keeping to this delivery schedule.

The requests by customers to change the vessel type that they have ordered are evaluated on a case-by-case basis, provided that the requested vessel type is one of the vessel models built by its yards and there is no significant change to the contract value and profit levels.

'We know that times are tough and the credit crunch is, one way or the other, affecting everyone. During this turbulent phase, we would remain proactive and very sincerely work with our customers to safely cruise through this turmoil,' said executive chairman Ren Yuanlin.

Yangzijiang's order book stands at US$6.43 billion comprising 145 vessels with deliveries scheduled till 2012.

Figures released at its first-quarter results presentation showed a delivery schedule of 45 vessels due in 2010, and 50 in 2011.

The same figures showed that the value of Yangzijiang's container ship deliveries (US$4.3 billion) is almost twice that of the bulk carriers (US$2.4 billion) and that about a third of the orders (51 vessels) are for the 4,250 TEU type of container ship.

The benchmark Baltic Dry Index rose to its highest in more than seven months on Monday, on recovering China coal and steel demand.

The container shipping market meanwhile remains in the doldrums as global consumer demand remains weak, with an estimated 10 per cent of the world's container ships laid up because of overcapacity in the market.

However, there is still a massive order backlog for bulk carriers and broker Drewry has said that the global fleet is expected to grow by 16 per cent this year.