China Shipping to order bulk carriers

China Shipping (Group) Co., the nation?s second-biggest sea-cargo company, plans to order dry- bulk ships this year as prices fall on overcapacity concerns and the global recession. “We?ll never give up on new investments,” Vice Chairman Zhang Guofa said in an April 30 interview in Shanghai. He declined to say how many vessels the company would add.

China Shipping intends to order vessels as prices have fallen following an 81% drop in bulk-shipping rates in the last 12 months caused by China?s waning demand for imports of iron ore and other commodities. The company has avoided the worst of the collapse in rates because of its dominance on domestic routes.

“The plan shows that the company believes dry-bulk rates have already bottomed out,” said Jack Xu, a Sinopac Securities Asia Ltd. analyst. Its China Shipping Development Co. unit “is still profitable because of the limited competition in the domestic market.”

An order for vessels by state-owned China Shipping would also be in line with government efforts to help local shipbuilders. The nation?s shipyards, which build more than 70% of dry-bulk vessels worldwide, didn?t win a single order in the first quarter, according to Shanghai Waigaoqiao Shipbuilding. “As a big enterprise, we always echo what the government calls for,” said Zhang. “Still, the government isn?t forcing companies to invest or buy ships.”