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Santanu Sanyal

Korean ship-builders pitch for higher value, series production types

A VIEW of a ship-building yard

Kolkata , May 8

The bulk carriers having fallen out of favour of the major shipbuilders in Korea, Shipping Corporation of India (SCI), having plans to acquire several bulk carriers of different sizes, may have to turn to the Chinese yards for placing orders.

But the problem is that the Chinese yards do not always welcome the idea of going through the tardy Indian process of tendering, lowest bidding etc, which SCI, being a state-owned company, would generally insist on. Instead, the Chinese yards prefer negotiated deals - something not hugely favoured by the Indian authorities. But then SCI has little choice in this matter.

The major shipbuilders of Korea have pitched for higher value, series production types such as LNG carriers, tankers and containerships. Hyundai Heavy Industries, the world's largest shipbuilder, delivered its last bulk carrier in early 2004 and has not accepted any single order for a bulker since. On the other hand, the biggest increase in capacity has taken place in China as many of the new shipyards there concentrate only on bulk carrier building.

SCI, which has plans for acquiring two Capesize bulk carriers (170,000 dwt each) immediately, with the chance of acquiring two more subsequently, four Panamax (80,000 dwt each) and six Super Handymax (55,000 dwt each), therefore will have no other choice but to opt for the Chinese yards.

Some Japanese yards too build bulk-carriers but their capacity is limited. Also, the Japanese-built ships are believed to be costlier vis-à-vis the Chinese-built.

`Mulling second sale route'

The slowdown in bulk ordering worldwide should also mean a slower pace of deliveries and SCI therefore is mulling acquisition by way of "second sale", i.e. sale of the vessels whose original owners refuse to take delivery for whatever reasons and the yards therefore decide to sell the vessels to a new buyer. The offer for "second sale" again will be from Chinese yards, though through brokers.

Right now SCI has a total of 22 bulk carriers, half of which will have to be scrapped by 2011/12. Hence the plans for new acquisition. The process should start right now because it takes time for the new capacity that is being built in the bulker market to come fully on stream and for yards to achieve the productivity they can physically handle.

More Stories on : Shipping | Shipping Corporation of India Ltd

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