Global Chartering is said to be in talks with a Chinese shipyard for up to 10 energy-efficient bulk carrier newbuildings in a deal valued at approximately $302m in total.

The London-based joint venture between steel and mining giant ArcelorMittal and Peter Livanos-backed DryLog is looking to order six kamsarmax bulkers and four mini-capesize vessels, according to shipyard sources.

The deal is being viewed as part of plans to expand production at India's Essar Steel.

The company is said to have opted for the bulkers to meet stricter emissions regulations that come into effect in 2025.

Global Chartering is said to be holding newbuilding talks exclusively with Yangzi-Mitsui Shipbuilding, also known as YAMIC — a joint venture yard involving Yangzijiang Shipbuilding and Japan’s Mitsui E&S Shipbuilding.

Advanced talks

Talks appear to be advanced and the dry bulk company is said to have inked a letter of intent for six 82,500-dwt and four 110,000-dwt bulker newbuildings with the shipyard.

Yangzijiang declined to comment on the potential bulker order.

ArcelorMittal did not respond to requests for comment before TradeWinds went to press.

Shipbuilding players said Global Chartering started the discussions for the 82,500-dwt wide-beam bulk carriers some time ago while enquiries for the 110,000-dwt mini-capes “came later”.

TradeWinds is told that Global Chartering is looking to expand its bulker fleet following the acquisition of India's Essar Steel by ArcelorMittal and Nippon Steel.

Essar Steel was acquired by the partners in December 2019 in a deal valued at $5.7bn. Nippon Steel and ArcelorMittal have since drawn up a business plan that will see Essar's steel production double by 2030 to meet increasing domestic demand.

“These bulk carrier newbuildings will mainly be used to transport iron ore to Essar Steel’s plants in India,” an industry source said.

“The terminals there can only accommodate vessels up to 120,000 dwt.”

ArcelorMittal's own business development plans involve investing in steel mills in developing economies. Restricted port facilities in emerging economies is likely to suit investment in kamsarmax and mini-cape tonnage rather than larger capesize bulk carriers.

Global Chartering is expected to be paying about $27m each for the kamsarmaxes and close to $35m apiece for the mini-capesize vessels.

The company is said to have opted for the bulkers to meet the Energy Efficiency Design Index (EEDI) Phase 3 standards — a 30% improvement in energy efficiency compared with 2018 levels. Compliance with EEDI Phase 3 is not required until 2025 but many owners are ordering ahead of the regulation amid increasing environmental concerns over shipping emissions.

It is expected that Mitsui E&S Shipbuilding will provide the ship design, with production taking place in China.

Once Global Chartering firms up the newbuilding contract, YAMIC is scheduled to deliver the vessels between the second half of 2022 and 2023.

Global Chartering was earlier linked to a 180,000-dwt bulk carrier newbuilding order placed at Yangzijiang for delivery in 2022 by Japanese company Lepta Shipping. Global Chartering is understood to have agreed to take the vessel on long-term charter.

DryLog became an equal shareholder of Global Chartering two years ago when it bought a 50% stake in ArcelorMittal's shipping subsidiary. The Greek shipping company has had a close business relationship with the steel maker for more than 25 years.

The 176,000-dwt Bulk Spain (built 2011) is one of two capesize bulkers jointly owned by DryLog and ArcelorMittal. Photo: S Seelemann/MarineTraffic