Analyze: The new around for COSCO to purchase new ships

2014-09-25

Cosco said in a statement that it signed deals to buy six bulk carriers with a deadweight of 81,600 metric tons each for $188.9 million and four bulk carriers with a deadweight of 208,000 tons each for $231.6 million. The ships will be delivered between 2016 and 2017 from shipyards in China.

The company was considering placing dozens of orders for new cargo ships in 2014 to take advantage of the Chinese government’s new cash subsidies for vessel scrapping, two people familiar with the matter said last year. The purchases would allow the company to upgrade its fleet of aging dry-bulk ships, they said.

China Cosco Holdings Co. (1919.HK), the flagship of state-owned shipping conglomerate China Ocean Shipping (Group) Co., said Wednesday it would buy five new container ships for $618 million.

The ships–which are 14,500 20-foot equivalent units, or TEUs, in size–will be built by China Shipbuilding Trading and Changxing Shipbuilding, Cosco said in a statement. They will be delivered between 2017 and 2018 and will cost $123.6 million each, Cosco said.

As mentioned above, concentrating on the round of new shipbuilding orders, the analysts said that these orders are significantly different than before. COSCO placed orders with high price last time when the market was in good condition, but when it took a sudden turn rapidly, the company was unprepared. The purchase this time is when the market in depression, and the price is relatively lower, which can offer preparation for the market recovery.

However, there are also some different views. One insider is anxious that the significant loss of COSCO in 2011 and 2012 was just because purchasing ships earlier with high price, causing overcapacity when the market was getting worsen. It can be understood that purchase ships with lower price but the problem is if the depression continues? What other problems COSCO will face at that time?

Source from : CNSS

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