Taiwan’s Eddie Steamship is unlikely to grow its fleet further in the near future, after picking up a bargain ultramax resale this year.
The hesitancy around further expansion comes as owner Hsu Chih-Chien (CC Hsu) says the incipient US-China trade war has made him wary.
Hsu and a delegation from Taipei took delivery of the 63,400-dwt Ocean Conqueror at China Merchants Heavy Industry (CMHI)’s Jiangsu yard last week.
The ship brings Eddie Steamship’s fleet to six, ranging from handymax to post-panamax. That includes two supramaxes it has on bareboat charter, with purchase options, from Hsu’s former public company Courage Investment.
The Ocean Conqueror delivery is a one-off for the Chinese yard as well as the owner.
CMHI is not really a merchant shipbuilder but an offshore specialist making a transition into cruiseship building.
Happy accident
It wound up with the ultramax by accident. The newbuilding was originally ordered for construction at a private yard through China Merchants Hoi Tung Trading, which handles ship and offshore sale and purchase for CMHI parent China Merchants Group.
The original owner, Victoria Steamship-affiliated Blue Planet, held orders for up to nine ultramaxes at Jiangsu Haitong Offshore Engineering and the former Jiangsu Hongqiang Marine Heavy Industry yards, placed in 2014 for a reported $27m per ship. But the company walked away from the last unit after the yard’s financial exigencies delayed the ship’s completion.
Hoi Tung acquired the unfinished hull and towed it upriver a few miles to Haimen, where Eddie Steamship picked it up for $23.3m in February.
“Prices went as high as $25m after that and may have softened in the past three weeks because of uncertainties about US-Chinese trade relations but would definitely still be above what I paid,” Hsu says.
The Ocean Conqueror is now bound for Indonesia to load coal for Taiwan.
Bargain-hunter Hsu says that a couple of weeks ago, he quit actively looking to expand.
“Unless tomorrow Trump and Xi Jinping announce that they are buddy-buddy again, uncertainties will remain and businesses will be postponing investments,” he says.
Taiwanese shipowners enjoy perhaps the cheapest US-dollar financing in the world, and a source well briefed on Taiwanese ship finance says the country’s banks can offer a spread above the benchmark Libor rate about half of what it is in the US or Europe, and one-third of what is available in China.
Hsu says he could raise funds for bigger deals but does not expect to grow his fleet dramatically soon, even if trade peace breaks out. “I will definitely not become the next John Koo,” he says, referring to the debut deal of Koo’s new Hong Kong-based Glory Maritime International Holdings.
TradeWinds reported last week that the former Valles Steamship and Orient Steamship director had re-emerged with an order for up to 10 ultramaxes at Wuhu Shipyard at $24m per ship.
Meanwhile, CMHI Jiangsu has approximately halved its backlog of jack-up rigs and is in the process of investing in new facilities for cruiseship building, says Yao Rulin (Wallace Yao), the yard’s general manager and a Communist Party secretary.
Hong Kong-based Jiang Feng, vice managing director of Hoi Tung Trading, has also confirmed to TradeWinds that the yard has seven unsold jack-up rigs and says there is strong renewed interest in the sector from foreign and especially Norwegian investors.
CMHI is building two of the Valemax ore carriers in a series for sister company Ming Wah.
But Jiang sees the future of the CMHI yards as remaining in offshore and other high-value-added ships, including cruiseships, starting with an expedition ship series on order for US-based SunStone and continuing with larger vessels after the planned investment in new cruise shipbuilding facilities.
