China Rongsheng Heavy Industries inks 2 6600TEU containership deals

Accounts for 20% of total new orders of Chinese shipbuilders in 1H 2011 amid 42.5% slide in global new orders.

China Rongsheng Heavy Industries Group Holdings Limited (“China Rongsheng Heavy Industries”), has announced that it has recently secured orders for 2+2 6600TEU containerships from a major European shipowner.

Mr. Chen Qiang, Chief Executive Officer and Executive Director of China Rongsheng Heavy Industries, said, “This is the third group of shipowners that has ordered 6600TEU containerships from China Rongsheng Heavy Industries within the last two months.

Currently, the Group is holding 6+2 shipbuilding contracts of 6600TEU containerships in hand. Under the adverse shipping market situation, China Rongsheng Heavy Industries’ strong competitive position has once again been clearly demonstrated by securing these new orders. The 2+2 6600TEU containership orders are part of a series of recent huge orders that not only have filled the order book backlogs, but also rationalise the newbuilding orders structure of the Group”.

According to the contracts, the 2+2 6600TEU containerships would adhere to the latest ship design standard, identical to those vessels previously ordered by other shipowners.

The new ships would reduce the speed from 25 kn to 21 kn as well as the ballast water capacity. NOx and SOx emissions would also be decreased to the level that can fully comply with the Tier II emission standards of the International Maritime Organization (IMO). All of these features save oil consumption and lower transportation costs, satisfying the demand from shipowners and are aligned with the latest market trends. Stepping into 2011, global demand for containerships has been increasing amid the weak shipbuilding market this year.

According to Alphaliner, a French shipping consultancy, idle containerships in early June dropped to their lowest level since August 2008. Industry players expect that fewer idle containerships and better container shipping market outlook would attract more shipowners to place new orders for containerships. According to Clarkson Research, the new orders for containerships globally have surged to 175 in the first half of 2011 from just 13 containerships in the same period last year. Against this background, a recognised shipbuilder such as China Rongsheng Heavy Industries with strong ability to secure new orders would be a vigorous competitor and occupy a greater market share in the containership industry, according to a China Rongsheng report.

Mr. Chen Qiang added, “Not only have we secured more new orders for containerships, overall orders are also rising notably. Subsequent to the strong rebound in 2010, the shipbuilding market has once again been declining during 2011. According to Clarkson Research, as at 30 June 2011, global new orders in the first half of 2011 decreased by 42.5% over the same period last year. The situation was even worse for Chinese shipbuilders. More than half of them failed to secure new orders in the first half of 2011. Despite the weak market, we have secured new orders for 30 new vessels since the beginning of this year. Of these vessels, 24 are bulk carriers and six of them are containerships with a total value close to USD1.5 billion. This order surge has helped us maintain our market leadership”.

China Rongsheng Heavy Industries has secured the highest number of new orders in the country over three consecutive years between 2008 and 2010. According to the latest statistics from Clarkson Research, the Group’s performance in securing new orders in the first half of 2011 is superior to the same period last year in terms of number, DWT and amount. The proportion of the Group’s new orders of the total orders received by shipyards in China has also shown improvement, increasing from 8% in the first half of 2010 to 21% in the same period of 2011.

Mr. Chen Qiang concluded, “The continued increase of our orders on hand reflects the strong confidence of shipowners in the Group and our good reputation in the industry. This business is forming a solid foundation for the Group’s future development. Although the global shipbuilding market remains slow, our business has not been adversely affected and we are achieving sustained and stable income growth as planned. In the near future, our strong ability to secure new orders should lead the overall industry to grow and play a leading role on the international stage. We are moving forward to become a leading heavy industries enterprise and generate more promising returns for our shareholders and investors”