Cosco Shipping Bulk, the bulker arm of Chinese shipping giant China Cosco Shipping Corp, is looking to order a series of newcastlemax bulkers to ship bauxite from Guinea to China.
Shipping players in China said the Guangzhou-based dry bulk company is looking to order up to 30 newcastlemax bulkers at domestic shipyards.
“Cosco Bulk will kick off its newbuildings plan with six firm vessels,” a shipping source said. “The rest are optional units.”
Shipping players said Cosco Bulk needs the firm orders for 210,000-dwt vessels after entering a contract with state-controlled Aluminum Corp of China (Chalco) to ship bauxite from the West African country.
Large investment
Chalco, which is listed on both the Hong Kong and New York Stock Exchange, is the world’s second-largest alumina producer and China's largest producer of both alumina and aluminium. The Beijing-based company is investing up to $706m in the Boffa bauxite project in Guinea. The aim is to secure a long-term and steady supply of the high-quality commodity.
The start-up date for shipments and the amount of bauxite that Cosco Bulk is going to carry for Chalco have not been disclosed. But one bauxite shipping player said Cosco Bulk and Chalco’s contract involves at least two phases.
“For the first phase, the cargo volume is around five million tonnes per year,” one bauxite shipping source said. “The cargo volume will increase up to 10 million tonnes.”
Six vessels required
The source estimates around six newcastlemaxes would be needed to ship five million tonnes of bauxite from Guinea to China each year.
Shipbuilding sources said major state-owned shipyards that are capable of constructing newcastlemaxes have been approached, including Shanghai Waigaoqiao Shipbuilding, Dalian Shipbuilding Industry Co and CIC Jiangsu.
One shipyard executive said his company had received enquiries for several newcastlemax bulkers from some Chinese leasing companies. He said he is unaware of the ultimate charterer for the ships, but there are signs it could be linked to the Cosco effort.
One shipbuilding source said the Cosco Bulk-driven enquiry for the newcastlemax bulkers is still in the early stages, and he foresees the newbuilding deal will only be able to conclude during the first half of next year.
He said Cosco Bulk is seeking vessels that comply with the IMO's new Tier III emissions standards.
“Should Cosco confirm the order of the 30 newbuildings, the project would cost the company around $1.65bn," the source said, basing the estimate on a price tag of around $55m for a 210,000-dwt bulker.
'Unknown delivery date'
“The delivery date for the newbuildings is not known. But shipyards can start delivering them in 22 to 24 months after signing the order.”
The shipbuilding source said Cosco Bulk is not going for dual-fuel vessels because China Petroleum & Chemical Corp (Sinopec) aims to start supplying low-sulphur bunker fuel by 1 January 2020 to Singapore and some "One Belt, One Road" countries to meet the IMO’s 2020 regulations.
Another shipbuilding player said that besides newcastlemax bulkers, Cosco Bulk will also be ordering some transloaders, tug boats and pushboats for Chalco’s project.
Cosco Bulk is China’s largest bulker company and controls more than 400 vessels, with a total carrying capacity of more than 36.5 million dwt. Its fleet includes 28 VLOCs, 47 capesizes, 102 panamax bulkers and 223 handysizes.
