Owners ask yard for lower prices

Taizhou Sanfu Ship Engineering is set to begin talks with owners who have requested lower contract prices for bulk carriers already on order. The privately-owned Chinese shipyard said that it had received no requests to cancel any ships on its orderbook, now comprising 47 vessels. But commercial director Qin Weimin said that some owners with orders at the yard had signalled they would be asking to reduce the contract price.

“This is not finalised, but we will be talking,” Qin said. Most of the yard’s contracts were signed in 2006 and 2007 when prices negotiated “were still reasonable”, he said.

Supramax bulk carriers at the yard were contracted at prices of between $33m-$38m, for example, compared with “crazy” prices of up to $45m at rival yards. Like many yards in China, Taizhou has indicated that it would talk to owners about lowering construction prices, but only to reflect the cheaper cost of steel plate. Taizhou had also agreed to a 12-month delay on building four, 57,000 dwt supramaxes ordered by German shipowner Conti Reederei. “We only agreed an extension of the delivery times, nothing else,” Qin said.

There are around 3,500 vessels on order in Chinese yards, but difficulties accessing finance, combined with low freight rates and falling asset values have seen many owners seek to cancel or delay ships. The Taizhou Sanfu shipyard has four slipways at its Yong’an site and has the capacity to deliver as many as 24 vessels annually.