Shipyards fight over SCIs VLCCs

Six shipbuilders from South Korea, two from China and one from India are competing for a contract estimated at $540 million to build four 318,000 dwt VLCCs for the state-run Shipping Corp. of India Ltd (SCI). SCI will now shortlist the technically qualified applicants who can submit price bids for the contract. A spokesman for SCI declined to comment on the tender. The tender closed on 15 November.

At current prices, each tanker will cost around $135 million to build. Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering, Hyundai Samho Heavy Industries, STX Shipbuilding and Hanjin Heavy Industries and Construction, all six from Korea, have submitted initial technical bids for the contract. China?s Dalian New Shipbuilding Heavy Industries and Jiangsu Eastern Shipyard have also bid for the contract. India?s newest private sector shipbuilder, Pipavav Shipyard Ltd, is the lone participant from the country.

In a market where new shipbuilding orders have dried up in the wake of the global financial crunch and slower demand for moving goods, shipbuilders are desperate to grab orders. “Everybody is trying to get an order,” said an official at Hyundai Heavy Industries. Slower demand for transporting goods has pulled down ship hiring rates which, in turn, has led to a drop in ship prices, industry analysts say. For instance, the cost of building a super tanker has declined to around $135 million from a high of $160 million in August.

Oil refiners are now seen favouring VLCCs to haul crude to cut transportation costs as larger quantities can be shipped at a time. SCI, India?s biggest ocean carrier, currently owns and operates three VLCCs and a fourth will join the company?s fleet in June 2009. The company is looking to buy four more to strengthen its position in the energy transportation sector.