Indonesia plan to buy Rio copper stake could be win-win

Indonesia said on Tuesday it plans to acquire Rio Tinto’s stake in the Grasberg copper mine operated by Freeport-McMoRan Inc, potentially solving a drawn-out problem for all three parties. Under a joint venture formed in 1996, global miner Rio has a 40 percent interest in Freeport’s Grasberg contract, entitling it to 40 percent of production above specific levels until 2021 and 40 percent of all production after 2022. (Reuters)


Electric charge: Glencore bets big on car battery metals

Glencore has increased production of the metals used to make electric car batteries faster than its major mining rivals, according to an industry-wide analysis that shows the scale of a strategy that has big prospective risks and rewards. The Anglo-Swiss company’s output of cobalt and copper roughly doubled in the five years to 2016, while its production of nickel quadrupled, the research compiled for Reuters by S&P Global Market Intelligence shows. (Reuters)


Thyssenkrupp chairman rejects investor call for breakup

Thyssenkrupp Chairman Ulrich Lehner has rejected investor calls to break up the industrial group and backed top management’s plan to transform the firm into a technology group, Germany’s Handelsblatt reported, citing an interview. “Breaking up the group is not at all an issue,” Lehner was quoted as saying by the business daily in an interview published on Tuesday. (Reuters)


Dreyfus sugar unit sees smaller Brazil crop, higher ethanol demand

Brazil’s Biosev, the sugar and ethanol unit controlled by commodities trader Louis Dreyfus, said on Tuesday it expects a smaller cane crop in the country’s center-south region in 2018/19 at 586 million tonnes, down from 599 million tonnes in 2017/18. Mills in general have reduced renovation of cane fields and cut crop care to reduce costs, leading the company to estimate a smaller crop next season, Biosev’s Chief Executive Rui Chammas told reporters after a presentation to investors. (Reuters)


Brazil soy farmers rely on barter for funding this season

Soy farmers in Brazil’s grain frontier state of Mato Grosso are relying more on barter then on their own capital to secure crop financing, growers association Aprosoja told Reuters on Tuesday. Based on data compiled by Mato Grosso-based research agency Imea, Aprosoja’s director general, Wellington Andrade, said self-funding represented only 19 percent of crop financing in the 2017-18 crop cycle, the lowest in almost a decade. (Reuters)


ABARES lowers forecast of Australia’s 2017-18 wheat output to 20.3 mil mt

Australian Bureau of Agricultural and Resource Economics and Sciences has revised lower its forecast of the country’s wheat production in 2017-2018 (October-September) to 20.27 million mt in its supply and demand report released late Tuesday.

The latest forecast is down 1.3 million mt from its last estimate in September.

The revision puts this year’s crop lower by 42%, or 14.74 million mt year on year, with the decrease attributed to unfavorable weather conditions from severe deficiency of rainfall registered in some of the key growing areas in New South Wales, Victoria and South Australia during spring.

The biggest production cut is forecast for New South Wales, down 58% on the year to 4.785 million mt. The planted area is also marginally downgraded, by 2% to 3.3 million ha. ABARES expects output in Victoria to decrease by 32% to 3.55 million mt and production in South Australia to fall by 45% to 3.65 million mt.

Western Australia was least affected, with output expected to fall 25% to 7.52 million mt.

In addition, recent reported above-average rainfall in New South Wales, Victoria and South Australia are very likely to affect the quality of the harvest.

Typically, excessive rainfall during the harvest season results in lower protein and falling number levels, together with chances of sprouted grains, if the rains last.

Barley production is also projected to be affected by unfavorable weather, falling 40% from the last marketing year to 8 million mt nationwide. (Platts)




Last Index Published Date: 6 DECEMBER 2017

Baltic Exchange Dry Index            1670   +4

Baltic Exchange Capesize Index     4126  +11

Baltic Exchange Panamax Index    1563   -8

Baltic Exchange Supramax Index    945   +1

Baltic Exchange Handysize Index   629   +1




‘Yue Dian 85’ 2011 87329 dwt dely Yantai 05 Dec trip via Australia redel Singapore-Japan $13,000 daily – Rio Tinto

‘Fortune Rainbow ‘ 2008 82372 dwt dely Lumut 18 Dec trip via Indonesia redel China $13,500 daily – Ausca Shipping

‘Aqua Grace’ 2017 81791 dwt dely EC South America 16 Dec trip redel Singapore-Japan $15,500 daily + $550,000 bb – cnr

‘SBI Parapara’ 2017 81227 dwt dely Amsterdam 06/08 Dec trip via USEC redel Black Sea $21,000 daily – Fayette

‘Agia Valentini’ 2012 80388 dwt dely Zhoushan 02/03 Dec 2 laden legs redel Singapore-Japan $11,000 daily – cnr – <fixed last week>

‘Kypros Loyalty’ 2015 77998 dwt dely CJK 08/12 Dec trip via Australia redel Singapore-Japan $13,500 daily – cnr

‘Doric Arrow ‘ 2001 75121 dwt dely Caozhou 10 Dec trip via Indonesia redel south China approx $12,500 daily – cnr

‘Rigel’ 1998 72465 dwt dely retro Trincomalee 2 Dec trip via EC South America redel Singapore-Japan $10,500 daily – cnr

‘Stove Caledonia ‘ 2010 58092 dwt dely US Gulf prompt trip redel E Med $23,000 daily – Cargill

‘Sage Caledonia’ 2013 58086 dwt dely Zhangzhou prompt trip redel Maldives $10,800 daily – Sinoway – <corrects delivery on 5/12 report>

‘Heilan Spring’ 2011 56920 dwt dely Prachuap 08/09 Dec trip via Indonesia redel China intention bauxite $10,000 daily – cnr

‘E Traveller ‘ 2011 56665 dwt dely Ningde 08/10 Dec trip redel China intention clinker $10,500 daily – cnr




Oil prices dipped, as refined product inventories in the United States rose in what the market interpreted as a sign of lacklustre demand. Gold was mostly unchanged in Asian trade after sliding to a two-month low in the previous session, despite a slightly weaker dollar. Shanghai copper fell more than 3 percent, tracking a steep drop on the LME as investors wound in profits on concerns China could see a weaker first half of next year. Chicago soybean futures rose for a fourth consecutive session, with the market trading near its highest since late July on concerns over dry weather reducing yields in Argentina, the world’s third-largest supplier. (Reuters)





Saudi Arabia raises official prices for all crude to Asia in January

Aramco has raised prices for all crude oil grades to Asia in January, a source with direct knowledge of the matter said on Tuesday. The producer raised its January official selling price for its Arab Light grade for Asian customers by 40 cents a barrel from the previous month to a premium of $1.65 a barrel to the average of the Oman and Dubai prices published by price reporting agency Platts, he said. (Reuters)


While U.S. Senate pushes Alaska wildlife refuge drilling, industry looks elsewhere

Even as the U.S. Senate moves to allow oil drilling in Alaska’s Arctic National Wildlife Refuge (ANWR), the real action is 150 miles (241 km) west, where industry proponents hope a coming sale of 10 million acres of land will revitalise the state’s sagging crude production. The Trump administration, through the U.S. Bureau of Land Management, will auction off 10 million acres on Wednesday in the National Petroleum Reserve (NPR-A), a hotbed of oil exploration and development in the western part of Alaska’s North Slope. (Reuters)


Lacklustre drilling campaign cuts interest in Norwegian oil licensing round

Norway’s attractiveness as an oil region took a hit on Tuesday when energy authorities said 11 oil firms applied for stakes in exploration blocks off Norway in its latest oil licensing round, less than half the number that applied in the previous round. A disappointing drilling campaign this year in the Arctic Barents Sea – where oil companies did not make a single significant discovery – was the main factor discouraging oil companies from taking part in the 24th licensing round, industry experts said. (Reuters)


US ULSD monthly exports have sharpest two-month fall recorded by EIA

US ultra low sulfur diesel exports fell by 6.806 million barrels to 30.517 million barrels in September, driven by falling demand from Europe and Latin America, according to Energy Information Administration data.

While that is only the second-sharpest monthly drop of the year, second to August, the decline from both months combines for the largest two-month fall in ULSD exports, at 15.365 million barrels,ever recorded by the EIA, which has data going back to January 2009.

ULSD exports have been falling from a peak of 45.882 million barrels in July, the highest mark ever reported by the agency.

The biggest decline in exports was to France, which declined from 2.743 million barrels in August to 606,000 in September.

Similarly, exports to the UK declined by 488,000 barrels during the same period, exports to Belgium fell 575,000 barrels and exports to Spain fell by 587,000 barrels.

The European declines somewhat tracks the restart of the largest refinery on the continent. Shell’s 404,000-barrel Pernis refinery in the Netherlands was shut by a fire on July 29 and began its restart process on August 24.

Latin American demand for US diesel was also curbed. Exports to Brazil fell by 298,000 barrels, Chile by 1.124 million barrels, Costa Rica by 556,000 barrels, Peru by 739,000 barrels, El Salvador by 313,000 barrels and Guatemala by 1.137 million barrels.

Exports to Mexico, however, rose sharply. September ULSD flows into the country rose by 2.092 million barrels to 8.549 million barrels. That is the most ULSD Mexico has ever imported from the US, according to EIA data.

Salina Cruz, Mexico’s largest refinery at 330,000 b/d, restarted operations at the end of October after repairing damage to the refinery’s power plant, due to a series of large earthquakes and aftershocks in September. The refinery first halted operations in mid-June, after a flood and subsequent fire. While repairing the damage, Pemex also advanced scheduled maintenance and upgrades at the plant. (Platts)


Limited Mexico Isthmus crude exports may bring Asia back to Mideast

A potential decline in Mexico’s exports of Isthmus crude grade in 2018 has raised alarm bells among various Northeast Asian refiners as the companies may have to shift their focus back to the Middle East for bulk of their medium sour crude oil requirements, putting the brakes on their feedstock diversification efforts.

Crude trading and procurement managers at two South Korean refining firms holding 2017 term supply contracts with Mexico’s state-run Pemex told S&P Global Platts that availability of both term and spot Isthmus barrels next year could tighten sharply due to a pickup in Mexico’s own domestic requirements.

The refinery sources said the companies are bracing for a decline in Mexico’s Isthmus crude exports to Asia to below 100,000 b/d in a worst case scenario next year.

In comparison, Asian trade sources indicated that Pemex’s trading and marketing arm PMI has been selling on average of around 150,000-200,000 b/d of the medium sour crude to Asia so far this year.

“[Mexico’s heavy sour] Maya crude exports have been slowly declining but the biggest worry is Isthmus … we expect term and spot Isthmus supply to tighten drastically next year as Mexico fast recovers from the earthquake damages,” one South Korean refiner source said.

“The recent force majeure declared on early December-loading cargoes can be taken as a precursor to much tighter supply [in 2018],” the source added.

At least two Northeast Asian refiners have confirmed their spot purchase of one Isthmus crude cargo of around 500,000-600,000 barrels each, loading in December, have been affected by Pemex’s recent declaration of force majeure, sources with the direct knowledge of the matter told Platts.

One of the sources said that his company was informed by Pemex in late November about the declaration of force majeure on its Isthmus cargo due to a need to meet domestic demand.

The Northeast Asian refiner is also looking for an alternative cargo to a 500,000-barrel Isthmus crude cargo at Salina Cruz in December, possibly from Americas among other options, the source said.

Meanwhile, a source at another Northeast Asian refiner said the company was not too surprised by the latest force majeure as it had understood from explanations by Pemex that Isthmus crude exports would not be available for export when it has normal refining operations. “Isthmus was available [for export] only after an earthquake, and the limited supply of the grade would only be going back to a pre-quake situation so the trend would not change significantly,” the source said.

Pemex’s 330,000 b/d Salina Cruz refinery, the largest in Mexico, was shut by an earthquake on September 7, and was running at 50% of capacity on November 29 following the restart of operations after a series of large earthquakes and aftershocks.

Looking ahead, sources at two Northeast Asian refiners said they understood that Isthmus crude might not be available for sale in the spot market unless there is imbalance of the crude requirements over Mexico’s domestic demand.

A number of Asian refiners have already started looking for alternatives to Mexico’s Isthmus crude in the Middle East and Europe for their requirements in 2018, prompted by the recent force majeure of the medium sour grade for loadings in December.

“Hopefully not, but if Isthmus exports [to Asia] more than halves next year, that’s going to seriously hurt Asia’s [crude sourcing] diversification plans,” said a sour crude trader at a Japanese trading firm.

The pursuit of alternatives to Isthmus may also have an impact on oil flows from North America to Asia as the medium sour grade has been a popular alternative to sour grades in the Middle East in the wake of the OPEC/non-OPEC production cut agreement, and the Mexican grade has often been co-loaded with US oil exports.

“Japanese refiners need to change crude oil configuration from Mexican [crude] to either Middle Eastern or US crude like Mars or Southern Green Canyon. Price-wise, US medium grades are higher than Middle Eastern crude currently … so it is difficult to fix [term],” said a Northeast Asian crude trader.

“The easiest substitute [for Isthmus] would be medium sour Middle Eastern grades like Saudi Arab Light, [Abu Dhabi’s] Upper Zakum and Qatar’s Al-Shaheen,” said a source at a refining company holding current year’s term contract with Pemex.

Isthmus is a medium sour crude, with a gravity of 32-33 API and 1.8% sulfur content.

In comparison, Saudi Arab Light has a gravity of around 34 API and sulfur content of 1.8%, while Upper Zakum has a gravity of around 34 API and sulfur content of 1.89%. Al-Shaheen has higher sulfur content of around 2.37% and heavier density of around 28.03 API.

“[The price of] Middle East crude like Upper Zakum will be supported because of [the possible] lack of [this] Mexican medium [crude]. [But it also] depends on supply of Arab Light [crude] term barrels,” said the Northeast Asian crude trader.

Meanwhile, one of the Northeast Asian refiners hit by the latest force majeure is now looking at Russia’s Urals Blend crude in addition to Upper Zakum and Qatar’s Qatar Marine as a possible alternative to Isthmus crude in 2018, said a source familiar with the matter.

Urals is a medium sour crude with a gravity of around 32 API and a maximum sulfur content of 1.8%. The crude mostly loads from the Russian Black Sea port of Novorossiisk and is priced against Platts Dated Brent.

However, some traders noted that the widening Brent/Dubai benchmark spreads of late does not bode well for the Russian crude and Northeast Asian end-users may find medium sour Middle Eastern grades more competitively priced.

The Brent/Dubai Exchange of Futures for Swaps — a key indicator of Brent’s premium to the Middle Eastern benchmark that often serves as a barometer of general strength in the European crude complex — jumped to $3.37/b November 28, the highest since July 4 last year when it was assessed at $3.38/b.

On a monthly basis, the EFS averaged $2.70/b in November compared with an average of $2.34/b in October and the highest since September last year when it averaged $2.91/b, Platts data showed.

A wider EFS typically makes various crude grades in the Mediterranean, North Sea, Black Sea and West Africa that are linked to the European benchmark less attractive than Dubai-linked Persian Gulf grades. (Platts)





Fitch Ratings: Gloomy Outlook for Global Shipping amid Overcapacity Woes

The outlook for the global shipping industry remains negative, according to Fitch Ratings, as the rating agency doesn’t expect a material improvement in market fundamentals in 2018 due to lingering overcapacity.

As explained, both container and bulk markets show signs of a revival, but the longevity of this trend remains uncertain due to limited adherence to capacity discipline in the sector. Improving market sentiment and a focus on scale and vessel size have stimulated new orders. The supply and demand dynamics are likely to support container, bulk and LNG rates, but tanker rates could remain under pressure.

The tanker shipping segment is the most exposed following a glut of new vessel deliveries in 2017.

“We expect demand for tankers to grow by around 4% in 2018, helped by rising global oil consumption, higher US exports and declining oil inventories. But this would still only broadly match the expected growth in tanker supply. Rates, therefore, may not fall further, but a sustained increase is unlikely,” Fitch Ratings said.

Container shipping freight rates have increased this year, but overcapacity makes this recovery fragile and previous rate increases have proved short-lived, the rating agency added. Any improvement in market sentiment tends to stimulate new orders, and this happened again when new orders, including for mega-ships, surged in the third quarter of 2017.

To remind, two container shipping giants, MSC and CMA CGM, have ordered a total of twenty 22,000 TEU mega boxships at Korean and Chinese shipyards.

“We expect supply growth to be over 5.5% in 2018, outpacing a likely over 4.5% increase in container transport volume growth. A sustainable recovery in rates will need continuous and consistent capacity discipline in the industry. This could be driven by consolidation in the sector over the medium term,” Fitch added.

According to the agency, the recent recovery in dry bulk shipping rates may also prove short-lived, although unlike for the other segments the demand is expected to outstrip the growth in vessel supply in 2018.

The market balance will be helped by the low level of new vessel orders for the last three years. China will remain the key driver for dry bulk commodities imports and trade, and the sector is therefore particularly sensitive to Chinese GDP growth, which is expected to be 6.4% in 2018, Fitch Ratings concluded. (World Maritime News)


EU Blacklists 17 Tax Haven Countries

European Union finance ministers have adopted the first ever list of tax havens, which includes 17 countries that fail to meet agreed tax good governance standards, the European Commission informed.

The list of non-cooperative jurisdictions for tax purposes was adopted on December 5 during a meeting in Brussels. In addition, 47 countries have committed to addressing deficiencies in their tax systems and to meet the required criteria, following contacts with the EU.

The list includes American Samoa, Bahrain, Barbados, Grenada, Guam, Republic of Korea, Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, and the United Arab Emirates.

The move is expected to raise the level of tax good governance globally and help prevent the large-scale tax abuse recently exposed in the Paradise Papers, which caused a stir in various sectors, including the shipping industry.

“The adoption of the first ever EU blacklist of tax havens marks a key victory for transparency and fairness. But the process does not stop here. We must intensify the pressure on listed countries to change their ways,” Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said.

“Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions, while those that have made commitments must follow up on them quickly and credibly. There must be no naivety: promises must be turned into actions. No one must get a free pass,” Moscovici added.

The idea of an EU list was originally conceived by the Commission and subsequently taken forward by Member States. Compilation of the list has prompted active engagement from many of the EU’s international partners.

However, the Commission said that work must now continue as 47 more countries should meet EU criteria by the end of 2018, or 2019 for developing countries without financial centres, to avoid being listed. The Commission also expects Member States to continue towards strong and dissuasive countermeasures for listed jurisdictions which can complement the existing EU-level defensive measures related to funding. (World Maritime News)


Two LPG VLGCs expected in NWE from US Gulf Coast in first half of December

Flows of LPG from the US Gulf Coast to Northwest Europe are expected to reach around 148,000 mt in the first two weeks of December, according to data from cFlow, S&P Global Platts trade flow software.

Landed volumes over the course of November were around 188,000 mt, according to cFlow, including two VLGCs.

According to traders and brokers in NWE, the arbitrage from the US to Europe has been largely closed since mid-spring of this year, narrowing the stream of vessels making the journey almost exclusively on term contracts, which were heard to largely be going towards petrochemical players.

That restricted supply has also helped support the CIF NWE large cargo market for propane at unseasonal highs throughout the summer, when prices typically fall on a lack of heating demand, despite what traders describe as weak buying interest for inland Europe.

The December arrivals include two VLGCs, according to cFlow data. The Providence left Houston on November 28 and is expected to arrive in Flushing, in the Netherlands, on December 11, according to cFlow.

The Crystal Marine left Freeport, Texas on November 30, and is expected to arrive in Flushing on December 12. Three smaller vessels, the Seasurfer, the Gaschem Orca and the Kortrijk, were also recorded to be on route from Houston to Flushing, to arrive before mid-December.

VLGCs crossing the Atlantic from the US Gulf Coast to Northwest Europe more commonly serve the propane market in the region, where the product is used for inland heating during winter and as a petrochemical feedstock. (Platts)


SeaIntel: Transpacific Contract Rates to Rise by 30 Pct?

Container carriers will highly likely be looking at increasing the Transpacific contract rate levels towards 2018, similarly to the development seen on the Europe trade.

Contract rates on Asia-Europe took about a year to recover to the rates implied by the spot market following the rate collapse in 2016. On the Transpacific, contract vs. spot misalignment is currently at 30-40% showing the potential for increases in contract season 2018-19 barring an all-out rate war, according to data provided by SeaIntel Maritime Analysis.

The container shipping industry intelligence provider created a model whereby the China Containerized Freight Index (CCFI) contract rate index was modelled around the spot rate data from the Shanghai Containerized Freight Index (SCFI).

On Asia-USWC, SeaIntel found that between 2009 and 2015, the model was 94% correlated. The major change in price formation happened in the contract market in 2016, with the contract rates dropping 30% below the levels indicated by the spot market, following the contract negotiation season in May 2016. The weakness is perpetuated into the contract season starting May 2017.

“Given that the contract market is presently 30% lower than where spot rates imply they should be, this indicates that if spot rates can be maintained, there is a potential for contract rate increase of 42% from the current levels, in order to regain the balance between spot and contract rates,” Alan Murphy, SeaIntel CEO, said.

Unless they decide to forego increases and opt for another rate war over market share, then the shippers need to prepare for a scenario of 30-40% rate increases in their contract rates for the 2018-2019 contract season on the Transpacific, SeaIntel concludes. (World Maritime News)


MOL shows off revolutionary gas-powered coal carrier

Mitsui OSK Lines (MOL) along with fellow Japanese companies Tohoku Electric Power and Namura Shipbuilding have jointly earned an Approval in Principle (AIP) from Lloyd’s Register for the design of an LNG-powered coal carrier.

This is Japan’s first joint acquisition by three companies — a shipping company, cargo owner, and shipbuilder — of an AIP for a vessel powered by LNG.

The vessel design ensures sufficient cargo capacity without making the hull larger by installing the LNG fuel tank at the stern. In addition, the study is pursued based on installation of the tank cover with an eye toward preventing an onboard fire from spreading to the LNG fuel tank while streamlining inspection work.

“MOL will forge ahead with this cutting-edge coal carrier,” the Japanese line said in a release today. (Splash247)


EU Okays COSCO’s OOCL Takeover

The European Commission has given the green light to COSCO Shipping’s bid to take over Orient Overseas (International) Limited.

Under the offer launched in July, COSCO Shipping Holdings and Shanghai International Port Group (SIPG) seek to acquire all issued OOIL shares at an offer price of HKD 78.67 (USD 10.07) in cash, totaling in USD 6.3 billion.

On completion of the transaction, COSCO would hold 90.1%, while SIPG would hold 9.9% of OOIL.

“The joint offerors are pleased to announce that with respect to anti-trust review in the EU under the EU Merger Regulation, on December 5, 2017, the European Commission made a decision to allow the offer to proceed. Accordingly, pre-condition (c) has been fulfilled,” a joint statement reads.

The approval of the bid follows the clearance from COSCO Shipping’s shareholders received in October and that of State-owned Assets Supervision and Administration Commission (SASAC) in September.

The combined entity, if the merger is completed, would become the world’s third largest container carrier, according to shipping consultancy Drewry.

Specifically, the duo would have a combined fleet of 400 vessels operated over a much-expanded network, with the capacity exceeding 2.9 million TEUs including orderbook, pushing CMA CGM from its spot.

COSCO and SIPG said they would continue to work on meeting the remaining pre-conditions for the deal to be finalized. (World Maritime News)


Latin America now Maersk Line’s single largest tradelane

Latin American related trades will now become Maersk Line’s single largest tradelane, based on capacity deployed, following the completion last week of its takeover of Hamburg Süd, according to data from Alphaliner.

Fully 75% of the German carrier’s current capacity is deployed on Latin American-related trades.

Maersk and Hamburg Süd currently have a combined capacity share of 33% in Latin America, excluding the Mercosul capacity that will be divested to CMA CGM.

Maersk Line paid €3.70bn ($4.40bn) for Hamburg Süd in a deal that gives the combined entity some 4m slots.

Alphaliner went on in its latest weekly report to identify how Maersk’s exposure to the north-south trades is changing dramatically in the wake of taking on Hamburg Süd.

“Maersk’s reliance on North – South volumes is set to increase even further following the acquisition of Hamburg Süd,” Alphaliner stated.

The North – South trades accounted for 49% of Maersk’s total liftings of 5.26m teu in the third quarter of 2017. Factoring in Hamburg Süd, that figure is set to rise to 55%, compared to 31% on the east – west trades and 14% on the intra-regional trades.

With the main east-west tradelanes set for fierce competition and a large swathe of new capacity coming in over the next two years, Maersk’s shift to the north-south trades, viewed as strong growth prospects, can be seen as well timed. (Splash247)





Zhuhai Port raises $224m to build huge bulker fleet

Zhuhai Port, a major seaport in the Pearl River Delta next to Macau, has announced a plan to issue around 158m new shares to 10 designated investors to raise around RMB1.48bn ($224m) to fund the establishment of a bulker fleet.

The net proceeds will be used to fund the acquisition of a total of 55 vessels including both newbuildings and secondhand vessels, all of which will be used for bulk transport in the domestic river and coastal regions.

According to the plan, the port’s shipping unit, Zhuhai Port Shipping, will order forty 3,500 dwt river multipurpose vessels, two 22,500 dwt bulk carriers and two 45,000 dwt bulk carriers. It also plans to acquire three 12,000 dwt secondhand bulk carriers between 2018 and 2020.

The company will also establish a joint venture with Perfect Logistics and order two 22,500 dwt bulk carriers.

In addition, Zhuhai Port will also order six tugboats.

Zhuhai Port believes the fleet expansion plan fits its strategy to transform into an integrated logistics solution provider and will meet the growing demand for coal, grain and steel shipping. Many Chinese ports have developed their own fleets, most notably Shanghai. (Splash247)