NEWS / December 26, 2008

‘Fatal Day’ for Korean shipbuilders
December 29’ will be this year’s last ‘D-day’ for South Korean shipbuilding industry. On the day, creditors of C& Heavy Industries will decide on whether to provide fresh loans to the ailing shipbuilder. Also, the formal contract for Daewoo Shipbuilding & Marine Engineering (DSME) sale is scheduled to be signed on the same day. Especially, small and medium sized shipbuilders are keeping a close watch on the decision of banking agencies over C& Heavy bailout as the decision could become a benchmark for the restructuring of 26 S&M sized shipbuilders scheduled to be take place early next year. Large shipbuilders are also on the watch for DSME sale as it can cause a shake-up in the shipbuilding industry. Early this month, the creditors of C& Heavy temporarily approved a plan to reschedule debts owed by the shipbuilder and provide fresh loans at the beginning of next year. But they are now in dispute on the allotment of the financial support. On December 29, C& Heavy’s destiny will be decided by a documentary resolution without meeting and if 75% of the creditors agree to rescue the shipbuilder, it will eventually get the new loans. On December 23, Hanwha Group, the preferred buyer for a controlling stake in DSME, requested Korea Development Bank (KDB), DSME’s top shareholder, to delay payment for the acquisition, which is slated by the end of March next year. After the proposal, KDB said, “a delay will be impossible.” Accordingly, whether the formal contract would be signed on December 29 remains to be seen. If the contract is concluded, Hanwha would pay additional KRW 300bn (USD 228m) and the deal would turn the corner.



China shores up shipbuilders
The Ministry of Industry and Information Technology of China (MIIT) is planning to release some policies to shore up the nation's shipbuilders, mainly with the help of domestic financial institutions.China's major shipbuilders last Sunday talked with eight financial institutions like The Export-import Bank of China and China Development Bank, for the financial support to the shipbuilders. Now, the related policies are being made but the details cannot be disclosed, according to people close to the issue. The nation's shipbuilding industry should focus on three aspects now, said a top MIIT official said. One is to guarantee orders; one is to adjust structure and boost development; and the last one is to enhance innovation in the industry. The policies will not be complicated and concrete, but it is sure that the financial institutions would back up the shipbuilders, said an expert at the China Shipbuilding Economy Research Center.



Mediterranean's largest shipyard only months away
The Besiktaş Shipping Group, a leading company in the Turkish maritime business, will soon complete preparations and begin constructing a shipbuilding facility in the Adana-Yumurtalık Free Trade Zone. Once complete, the shipyard will be the largest of its kind in the Mediterranean Basin. İhsan Kalkavan, the owner and chairman of the Beşiktaş group and a former manager of the Beşiktaş Soccer Club, said his company began preparations eight months ago after obtaining a license to build a shipyard in the region. It then rented 300,000 square meters of land and applied for an Environmental Impact Report (ÇED). Speaking to the Anatolia news agency yesterday, Kalkavan said he estimates the ÇED will be ready by the first week of January. He said construction will likely start by February or March. The shipyard will occupy 100,000 square meters of land and 300,000 square meters of sea. It will also have two pools, one of which will be 400 meters long and 70 meters wide while the other will be 350 meters long and 70 meters wide. These pools will be used for supertankers exceeding 300 meters in length that need repairs. "The shipyard will even be able to handle aircraft carriers," Kalkavan noted, adding that it will have the capacity to repair 100 ships (400,000 deadweight) annually. Construction is scheduled for completion in three years and will likely cost $100 million. The company will use its own resources to finance the project, which is expected to employ 3,000 persons.

CSC won 386TEU orders
According to Chongqing Municipal Commission of Foreign Trade and Economic Cooperation, Chongqing Dongfeng Shipbuilding Corporation (CSC) won a shipbuilding order for four 368TEU container ships from an American shipowner on December 17, 2008.
The vessels have the total length of 106.68 meters, the width of 20.6 meters, the height of 5.8 meters, and the draft of 4.215 meters, and are classed into BV. These vessels will be built in accordance with ‘Performance Standard for Protective Coating’, which means this is CSC’s formal entry into the shipbuilding field of international container ships after the proclamation of the new shipbuilding rules from IMO, and CSC is one of the few shipyards which can follow the new rules at present. It is reported that this is the first order-receipt after company’s technical innovation, as well as the first shipbuilding order taken under the recent international financial crisis which affected the vessel export badly and resulted in almost zero volume of newbuilding delivery.

CSBC completed 12,600TEU
According to the report from United Daily News in Taiwan, Zheng Wenlong, the CEO of CSBC Corporation Taiwan said on December 22 that CSBC had completed the research and development of world’s largest containership.It was ordered by Taiwan’s Yang Ming Line (YML) originally but now the order is on hold due to the recession in shipping industry, he said. Zheng said that CSBC has already become one of the most competitive shipyards in the world after being listed on the stock market. CSBC’s 12,600 TEU containerships 366 meters in length and 48.3 meters in width belong to world’s first class and show Taiwan’s shipbuilding and design capability. It is understood that the largest container ships designed by the world’s largest shipbuilding country South Korea are for 12,500TEU level at present. He said that company strives for public facilities business opportunities including 'Love Taiwan 12 construction projects' in order to disperse the operating risks and enhance profits.

NEWS / December 23, 2008

Navig8 cancels product tankers order

The significant diversification by Drydocks World Dubai into the mainstream newbuilding market has been dealt a major blow, following with the cancellation of a newbuilding contract for four MR product tankers by Singapore-based Navig8 Group.


The tanker operator, which only started business in March 2007, is blaming its decision to pull out of the Dubai deal on poor market conditions. However, Navig8 spokesman Modi Mano said that “the contract was cancelled mutually between the shipyard and ourselves”.

He would not be drawn further on the reasons behind the order being pulled, nor would he confirm the contract price.

The four 53,500 dwt double-hull tankers were scheduled for delivery in 2010 and 2011. Navig8 also held an option on a further four vessels of the same class. No details have been given by the shipyard or the owner about compensation terms.

Steel cutting on the product tankers had yet to start, as DWD is busy with the construction of eight sophisticated seismic survey vessels for Norwegian and UAE owners.

Two of these vessels are being built for Norway’s Western Geco, and are expected to be operated by recently acquired Dubai-based operator Eastern Echo. Another six vessels are under construction for Dubai’s newly established Polarcus. All of the new buildings are of the unique Ulstein Design X-bow design and are due for delivery from the second half of 2009 through to the end of 2010.

Navig8, meanwhile, has a number of tankers under construction at shipyards in the Far East; two 114,000 dwt product tankers at China’s New Times Shipbuilding, four 75,000 dwt tankers at Korea’s Sungdong Heavy Industries and one 6,800 dwt vessel at China’s Jiangmen Shipyard.

NEWS / December 22, 2008

USA want more shipbuilding

U.S. Senator Susan Collins, R-Maine, and U.S. Senator Mary Landrieu, D-La., on Dec 19 wrote President-elect Barack Obama urging his Administration to support robust shipbuilding policies that would support the U.S. Navy, Marine Corps, and Coast Guard and re-energize commercial ship construction in the United States.

The letter, which was cosigned by 18 other senators, points out that while military leaders have documented a minimum national requirement of 313 ships to support America’s Navy and Marine Corps, the Navy’s fleet has declined to 284 ships. In order to attain 313 ships, 12 ships need to be budgeted annually. “Expanding American shipbuilding has the duel benefit of strengthening a critical branch of our national defense while bolstering our strained economy,” Sen. Landrieu said. “Attaining the minimum 313 ships that military leaders advise means we will have a naval fleet that competes with those of our potential adversaries. At a time when American manufacturing jobs are moving overseas, we have an opportunity to create highly-skilled jobs for the American manufacturing workforce here at home. I look forward to working with the Obama Administration to ensure that we support our military by building the necessary ships to protect our homeland and advance security needs abroad.” “With the smallest number of ships in the United States Navy since before World War II, I am deeply concerned by the insufficient size of today’s fleet and that funding for shipbuilding has not been adequate to achieve the 313 ships necessary to meet national security requirements,” Sen. Collins said. “We must maintain the skilled workforce necessary to expand and modernize our naval fleet to counter existing and emerging threats. Building more ships would also boost our economy by creating and preserving thousands of good jobs. As the new Administration prepares its budget, I hope our bipartisan letter will encourage adequate funding for shipbuilding.” In pressing their argument for an increased budget for defense and commercial shipbuilding in the United States, the senators highlighted both the economic and homeland security benefits that would accompany such a policy. An estimated 400,000 people in 47 states are employed by the shipbuilding industry, which consists of six major shipbuilding yards, several smaller ship construction and repair yards, and more than 4,000 major manufacturers of ship components and systems. One such shipyard is Northrop Grumman’s Avondale shipyard on the West Bank in New Orleans, which is the largest manufacturing employer in Louisiana with about 5,000 workers. This fall, Sen. Landrieu secured $933 million in the Continuing Resolution for the next LPD-17 ship to be built at Avondale. The funding is for construction of the 10th ship in the 11-ship program. While the President requested just $1.3 million for the program this year, Sen. Landrieu has pushed for its full funding at $1.7 billion. Without the funding for the LPD-17 program at Avondale, about 1,000 manufacturing jobs would have been at risk. The senators also highlighted the national security benefits to increasing America’s shipbuilding. “While America’s naval fleet is in decline, the navies of potential adversaries are on the rise,” the letter reads. “Russia has made rebuilding its naval power a priority, and the navy of China is expanding rapidly. By 2015 the Chinese Navy is projected to be larger than ours, and Russia has stated its intention to have the second largest Navy in the world by 2022. These countries may be building their naval forces to deny America access to critical regions and to limit America’s influence around the world.


Fincantieri reconsider delivery date

Italy’s Fincantieri revealed, it has recently been requested the late delivery of the cruises by some cruise companies.An official at Fincantieri said that it is mainly due to the jump in raw material prices followed by weakened USD exchange rate. He confirmed that company has already lost a very important super-large cruise order. It has been worrying about not being able to cash the two cruises ordered by Grimaldi Lines.


Orders drop in Japan

Shipyards in Japan, the world's third-largest shipbuilding nation, received 83 percent fewer orders last month as the global financial crisis cut demand for new vessels.The yards received orders for 219,823 compensated gross tons in November, the Japan Ship Exporters Association said today on its Web site. That compares with 1.27 million tons a year earlier. Orders this year have slipped 11 percent to 8.69 million compensated gross tons. The deepening financial crisis has dried up funds and global demand for commodities, prompting owners and operators of vessels to hold back purchases. The Baltic Dry Index, a benchmark of demand for shipping dry goods such as iron ore, has fallen more than 90 percent from a May record. "Enquiries by shipowners for new ships have declined due to the global financial crisis and a slump in the shipping markets," Masamoto Tazaki, chairman of the 20-member Shipbuilders' Association of Japan, said today at a press conference in Tokyo. Members of the group include Mitsubishi Heavy Industries Ltd., Mitsui Engineering & Shipbuilding Co. and closely held Imabari Shipbuilding Co. While contracts have dipped, there have been no reports of order cancellations at Japanese shipyards. The nation's shipbuilders are under no pressure to sign new contracts as they have four years of order backlogs, he said. Compensated gross ton is an industry measure of ship size, the time required and materials used in production. Meanwhile, DryShips Inc., whose ships carry raw commodities, canceled an agreement to buy four Panamax-class vessels for US$400 million and retained the right to purchase the ships by the end of next year. The company will lose US$55 million in deposits for the four vessels, which are owned by entities controlled by DryShips Chief Executive Officer George Economou, according to a statement. The original agreement was made in July. The company also paid US$105 million for the option to buy the ships by the end of next year for US$160 million more, according to the statement. Panamax carriers usually haul 75,000-ton cargoes.