China’s Chery Automobile, also known as Chery, is reportedly close to taking over Samjin Shipbuilding Industries Co in Weihai, Shandong province.
The vehicle maker, which controls Wuhu Shipyard in Anhui province, plans to build pure car/truck carriers at the new yard.
Shipbuilding sources said Chery has commissioned Wuhu to construct up to eight type-C tank LNG dual-fuelled 7,000-ceu car carrier newbuildings to be delivered in 2025 and 2026.
The deal is for three firm ships. However, Wuhu is unable to construct the vessels as its site can only build ships of up to 55,000 dwt or supramax size.
The 7,000-ceu PCTCs are far larger than supramax vessels.
Samjin Shipbuilding Industries Co, previously known as Weihai Samjin Shipbuilding, started off as a block maker for Daewoo Shipbuilding & Marine Engineering. It was established by South Korean businessman YI Kang during the 1990s. Samjin was transformed into a shipbuilding yard during the market boom in 2006. Its first newbuilding contract was a pair of 6,800-ceu pure car/truck carriers for Norwegian owner Dyvi Shipping.
Samjin only managed to deliver one vessel — the NOCC Atlantic (ex-Dyvi Atlantic, built 2009), as the other ship struck rocks during sea trials and sank.
In 2014, Samjin filed for court receivership following a market downturn and cash flow problems. But it was given a new lease of life in 2015, when Zhejiang Xiaoke Holding, an investment company in Zhoushan took over the shipyard.
Samjin is equipped with two dry docks of 300,000-dwt and 100,000-dwt capacity, as well as five berths, and can repair between 150 and 180 vessels a year.
Sources said Wuhu tried renting berths from Jinhai Intelligent Manufacturing in Zhoushan to build Chery’s newbuildings but failed.
“Wuhu studied and approached several shipyards in the country, and it finally picked Samjin Shipbuilding,” said one source.
Market talk of Chery taking over Samjin differs from local news reports that Chery is setting up a new shipyard in northern China.
Chinese news agencies reported that Chery is building a new shipbuilding facility in Weihai.
To be called Chery Wuchuan Weihai Green Offshore Technology, the yard will focus on building PCTCs and 80,000-dwt bulk carriers.
The shipyard is expected to achieve CNY 5bn ($740m) in annual output when production goes full-fledged. The size of the shipyard was not mentioned.
One shipbuilding expert thinks Chery would be taking a big risk if it starts building a new shipyard from scratch just to build PCTCs.
“The car carrier market is a niche sector and only a limited number of vessels will be needed,” said the shipbuilding expert.
“Ground-breaking of the facility and installing of shipbuilding equipment will take time … [the] labour force is also an issue. It makes sense if it [Chery] can take over an existing shipyard.”
Sources said Samjin is not currently building ships. The yard delivered its last vessel in late 2020.
The present financial status of Samjin is not known but the shipyard is believed to be carrying out some ship repairing activities.
Clarksons’ Shipping Intelligence Network (SIN) shows the builder delivered 14 vessels between 2016 and 2020. It currently has zero orders.
Chery is the latest Chinese automaker to build PCTC newbuildings to meet growing vehicle export volumes amid the short supply of car carrier tonnage.
SAIC Anji Logistics — the shipping arm of SAIC Motor — has 12 newbuildings on order, while BYD Auto has six vessels.
SAIC Anji has also teamed up with Cosco Shipping Specialized Carriers and Shanghai International Port Group’s SIPG Logistics to create a car carrier company that will order newbuildings, acquire secondhand vessels and charter ships to meet SAIC Motors’ car carrier tonnage demand.
Chery too has formed a joint venture. Together with state-owned Anhui Provincial Port & Shipping Group and JAC Motors, the trio has established Anhui Hangrui International Ro-Ro Shipping Co.
The joint company, which has a registered capital of CNY 900m, was reported to be planning to order a series of 7,600-ceu newbuildings. Chery and Anhui Provincial Port & Shipping each hold 44.44% stakes in the joint company.
Chery is one of the top automakers in China. Its cumulative sales for 2022 was slightly more than 1.23m, representing a year-over-year increase of 28.2%.
It exported about 450,000 vehicle units, about 67% more than the export volume in 2021. The maker plans to export 500,000 vehicles by 2025.
Chery made its debut into the shipbuilding business in 2007, when it bailed out Wuhu Shipyard — a former shipyard under the wing of China State Shipbuilding Corp.
It took over Wuhu with the plan to build car carriers, but this never took place.
Clarksons’ SIN shows Wuhu has 14 newbuildings on its orderbook. They include multipurpose vessels, chemical tankers, asphalt and bitumen carriers and general cargo ships.
The Anhui-based shipyard delivered kamsarmax bulk carriers before as it is equipped with two 80,000-dwt slipways.
But in 2019, it was told by the state that it could not build vessels larger than 55,000 dwt because of the restrictive height of the Nanjing Yangtze River Bridge.
