Cosco cancels bulker orders

Market sources say the Beijing-based China Cosco Holdings has cancelled at least five of the 23 ships of 57,000 dwt on order at subsidiary Cosco Shipyard Group (CSG). A source adds that the move is not recent. “CSG cancelled the ships three to four months ago, when the market was at its lowest point,” he said. “The ships that have been ditched were scheduled for delivery in 2010 and 2011.”

However, an official at Cosco Corp in Singapore, which controls 51% of CSG, says the company has not received any cancellations from China Cosco Holdings and that the owner only has 18 supramaxes booked at the yard, not 23. He adds that CSG has so far seen four newbuildings struck off its orderbook of 125 vessels and that it will delay delivery of 23 others. The official did not disclose the identity of the owners behind the cancelled vessels but India’s Great Eastern Shipping is said to have axed two of the four 57,000-dwt newbuildings it has on order at CSG.

Last week, China Cosco Holdings said it was negotiating with yards to delay the delivery or cancel some of its 58 newbuildings on order. But it did not reveal what type of ships. The company’s bulker orderbook comprises nine very large ore carriers, 10 Capesizes, 16 Panamaxes and 23 Handymaxes.

Meanwhile, sources familiar with CSG say its shipbuilding facility in Zhoushan is falling behind on deliveries. They add that Cosco Zhoushan was supposed to hand over its first two newbuildings, a 57,000-dwt Supramax bulker and a 5,200 ceu pure car/truck carrier, to China Cosco Group in December. The bulker is said to have been delayed because of problems with its main engine, while the car carrier has proven complicated to build.

Market observers say delays and order cancellations at CSG may not be a bad thing for the shiprepairer turned shipbuilder. It is said to have contracted too many vessels and over-stretched its production schedule.