Dae Sun dumps contract

Dae Sun Shipbuilding & Engineering (DSSE) has cancelled a contract with an unidentified Asian shipowner for the construction of six 32,000-dwt bulkers plus two on option. It blamed the owner’s failure to pay the down payment within the fixed time limit under the contract. It gave no further details. This is the third cancellation of a newbuilding contract unveiled since the turn of 2008.

The South Korean shipbuilder signed the contract for the eight bulkers in December 2007 at a per-ship price of $37 million for delivery by May 2011. They were the first bulkers to be built by DSSE. The deal required the owner to complete the down payment within 60 days of the contract date.

Since the beginning of 2008, there have been cases of newbuilding contract cancellation against the backdrop of a credit crunch caused by the U.S. subprime loan woes and delayed ship deliveries by smaller yards. In January, Hong Kong owner Jinhui Shipping & Transportation Ltd. cancelled its orders for two very large ore carriers (VLOCs) from China’s Dalian Shipbuilding Industry. The biggest factor behind the decision appeared to be Jinhui’s failure to get favorable loan terms. In February, Odfjell Tankers canceled a contract with Russia’s Sevmash Shipyard for the construction of 12 chemical carriers. Odfjell attributed the decision to the “serious delays in the construction process” and “demands for further price increases” by Sevmash.