Donald Trump's trade war with China has served to impede orders for $1.5bn worth of ethane carriers at two of the world's largest shipbuilders, TradeWinds understands.
US private equity firm Delos Shipping had been set to build the very large ethane carrier newbuildings at Hyundai Heavy Industries and Samsung Heavy Industries, as TradeWinds reported in July.
But shipbuilding players say the project has hit a snag after a first down payment from Delos on the 93,000-cbm vessels did not arrive.
They believe contracts for three firm ships and three optional units at each of the shipyards have now been terminated.
Delos had ordered the vessels on the back of long-term charters from China’s Zhejiang Satellite Petrochemical.
Imports on hold
Details of the charter were not disclosed but Zhejiang Satellite was set to use the tankers to transport ethane from the US Gulf coast to Lianyungang, in Jiangsu province.
It is unclear whether Delos managed to secure finance for the project, and there are also questions about whether Zhejiang Satellite had sufficient capital to build the infrastructure needed.
“Zhejiang Satellite needs to build infrastructure and storage terminals to import the ethane," one Chinese gas player said. "This requires a huge amount of financing and the amount exceeds the company’s value.
“On top of that, with the 25% tax imposed on US products, no Chinese firm is ready to import them. They are adopting the wait-and-see attitude.”
Listed on the Shenzhen Stock Exchange, Zhejiang Satellite is a manufacturer of integrated acrylic acid. It is the largest of its kind in China and in the top five worldwide.
Letter of intent
Shipbuilding players say Delos penned a letter of intent for up to eight LR1 newbuildings worth $372m with STX Offshore & Shipbuilding three years ago.
It was planning to order the tankers on the back of long-term charters. However, the deal failed to come into effect because the shipyard did not receive down payment from Delos.
Delos was founded by Brian Ladin and Richard Squires, who met each other through Bonanza Capital.
The company was formed as an investment platform focused on shipping sale and leasebacks and opportunistic operating vessel acquisitions.
Early this year, Delos entered the cruise segment by buying the 22,800-gt Deutschland (ex-World Odyssey, built 1998). The company did not disclose the purchase price of the German-built ship but said it has been leased back to the seller on a long-term basis.
