John Fredriksen’s interests are said to be planning a tanker newbuilding order in China after the shipping magnate’s Frontline exited the tanker consolidation move with Belgium’s Euronav.
They are said to be looking to order conventionally fuelled suezmaxes and aframax product carriers.
Several shipbuilding sources told TradeWinds that discussions for the LR2s started last year and are at an advanced stage with shipyards, with letters of intent for up to six vessels — including options — being inked to two separate yards.
One Shanghai-based source said: “[His interests are] seeking two firm LR2s plus options for an additional two sets of two ships.”
As for the suezmaxes, TradeWinds has learned discussions are at an early stage but that between two and four units are involved.
Frontline has indicated that market talk about the newbuildings is incorrect.
The names of the shipbuilders said to have been approached for the 158,000-dwt oil carriers have not been disclosed beyond one source saying that it involves “yards in China that are capable of building suezmax tankers”.
Chinese yards that have delivered suezmaxes include New Times Shipbuilding, Shanghai Waigaoqiao Shipbuilding, Dalian Shipbuilding Industry Co (DSIC) and dormant Jiangsu Rongsheng Heavy Industries.
Once a popular shipyard, Rongsheng exited the shipbuilding business in 2014 following the global financial crash. There is now market speculation that it is making a comeback due to the market boom.
But brokers believe it will be a challenge as China is facing a shortage of shipyard workers and local banks will be reluctant to issue refund guarantees to the yard due to its past track record.
As for the LR2 newbuildings, brokers said Fredriksen’s interests had inked LOIs with two Chinese shipyards — state-owned DSIC and nascent Hengli Heavy Industries (Hengli HI) — ex-STX Dalian Shipbuilding.
Formerly owned by South Korea’s STX Group, STX Dalian collapsed and exited shipbuilding in 2013. The shipyard was “resuscitated” in the summer of last year when Chinese private petrochemical company Hengli Group paid CNY 1.73bn ($256m) to acquire all the assets, with a view to making it into an offshore manufacturing base.
Hengli HI currently has some 3,000 employees and manufactures steel structures for various industries. It is also building four 20,000-dwt bulker newbuildings for its parent company for 2024 delivery.
Shipbuilding sources said the chances of Hengli HI becoming a leading shipyard in China are high, as its parent company has the financial muscle to pull it off.
TradeWinds is told that if Fredriksen’s interests select DSIC to build the LR2 newbuildings, the shipyard’s subsidiary company Shanhaiguan Shipbuilding will be tasked with constructing the product carriers.
Meanwhile, brokers explained that an LOI does not always translate into an official newbuilding contract for the shipping company or the shipyard. The buyer is still able to turn to another seller if a better offer comes along.
