Nasdaq-listed Sino-Global Shipping America has signed bareboat charters for a couple of bulkers to service a new contract involving Chinese exports.
The company said it has brought in two handysizes of between 40,000 dwt and 50,000 dwt, both built in the 1990s.
Sino-Global has this month clinched a deal with Yunnan Jingyifeng Supply Chain Management (JYF) to jointly develop the business of exporting US products to China.
These will include sulphur, vegetable oil, soybeans, barley, wheat and dried grains.
Sub-charter flexibility
Chief executive Lei Cao said: "While we are ramping up exports under that agreement, we felt it was prudent to secure vessels that would help to meet that demand and also provide Sino-Global versatility to sub-charter these vessels for immediate revenue as necessary."
He added: "We expect we can deploy both vessels on the spot market at approximately $7,500 to $8,500 per day based on given rates, which given the recent increase in the Baltic Dry Index made prudent financial sense."
Lei said it could use the vessels itself in the second half as it accelerates shipments under the JYF deal.
Demand growing in China
Sino-Global said it has seen a considerable increase in export demand following the 15 January signing of the US-China Phase 1 deal.
"We will continue to position the company to take advantage of a relatively unique situation following the trade agreement," Lei added.
JYF aims to use Sino-Global's customer relationships and experience as a procurement agent in purchasing 1m tonnes per year, which will then be marketed to JYF's customers in south-west China.
Sino-Global "anticipates reporting an increase in agency-based trading revenue, with the current market prices ranging from $75 per ton for sulphur products to $400 per ton for soybean products".
New opportunity
"The US has historically been a net importer of sulphuric acid and has not historically exported significant volumes to China, and the impact of Covid-19 has placed considerable pressure on China-based importers to expand and improve their supply chain network in order to meet the demands under the agreement," Lei said.
In April, Sino-Global brought in Chinese shipowner Kelin Wu as chief marketing officer after buying a 75% stake in his Mandarine Ocean, a Shanghai-based shipping company registered in the Marshall Islands.
Mandarine Ocean was founded in 2013 and has long-term contracts to operate 14 bulk carriers, six of which are owned by Wu.
The majority are handysizes and handymaxes, and range between 20,000 dwt and 50,000 dwt in capacity.
