CSSC Shipping is poised to order up to 10 VLCC newbuildings for charter to compatriot Rongsheng Petrochemical in the first tranche of a 30-ship project.
The Hong Kong-listed leasing arm of Chinese state conglomerate China State Shipbuilding Co (CSSC) will split the $850m orders between two group affiliates, shipbuilding players said.
“They [CSSC Shipping and shipyards] are at the advanced stage of the newbuilding discussions,” a shipbuilding expert said. “The newbuilding contracts may be signed before the year ends.”
TradeWinds is told that Dalian Shipbuilding Industry Co and Shanghai Waigaoqiao Shipbuilding will each be awarded five newbuildings, of which two will be firm ships and the remaining three optional vessels.
The shipyards are scheduled to deliver the firm orders in 2022.
“CSSC Shipping will be booking the conventional fuelling VLCCs. The shipbuilding price of the 300,000-dwt crude carriers will be around $85m each,” the shipbuilding expert said.
A CSSC Shipping official declined to comment when contacted.
A 30-VLCC project
In September, TradeWinds reported Rongsheng Petrochemical was partnering with CSSC Shipping to book up to 30 VLCCs for its shipping requirements.
The Shenzhen-listed subsidiary of Zhejiang Rongsheng Holding Group is not linked to Rongsheng Heavy Industries, formerly the largest private yard in China.
Last month, Rongsheng Holding and CSSC officially signed a strategic cooperation framework agreement to develop the VLCC project.
The vessels will transport crude oil from the Middle East to Rongsheng Petrochemical’s newly built refinery in Zhejiang province of Zhoushan city.
Rongsheng Petrochemical has one refinery with an annual production capacity of 20m tonnes of petrochemicals. Construction was completed last year.
Its second refinery and terminal will be operational from next year and will add another 20m tonnes of petrochemical production capacity.
Rongsheng Petrochemical has a plan to build a third refinery terminal that will add another 20m tonnes of petrochemical production per year, bringing the company’s annual production of petrochemicals to 60m tonnes in total.
Aside from the cooperation with CSSC Leasing, the company has also made a pact with China Cosco Shipping on strategic cooperation and collaborations in logistics for petrochemical products.
Rongsheng Holding has a trading company in Singapore called Rongsheng International Trading. The outfit started to fix VLCCs in the spot trade from late 2018.
Newbuilding activity picks up
The CSSC-Rongsheng orders will come on the heels of a recovery in newbuilding activity in the tanker market.
Data from Clarksons Research shows 17 tanker newbuildings totalling 4.28m dwt were ordered in November, the busiest month in tonnage terms since May 2018.
Backed by Chinese investment company Everest Venture Capital, Everest Korea Finance Advisory signed up for 10 VLCCs at Korea Shipbuilding & Offshore Engineering for $891m.
Other shipowners that recently returned to the newbuilding market included Greece’s Centrofin and Latsco.
“The newbuilding prices are getting really attractive, which [will] surely attract some big-pocket owners to order,” a Chinese brokersaid.
Clarksons’ guideline VLCC newbuilding price stands at $85m, down by $7m from the level at the end of 2019.
Suezmax newbuilding prices have fallen by $5.5m to $56m and aframaxes dropped by $2.5m to $46m.
