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July 17, 2009

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COSCO unit cancels orders for eight vessels

A UNIT of China COSCO Holdings Co has canceled a US$299 million order for eight vessels as the global recession cut the shipping company's profit.

COSCO (Zhoushan) Shipyard Co has canceled the orders for two vessels for Qingdao Ocean Shipping Co and six vessels for COSCO (Hong Kong) Shipping Co Ltd.

Construction of the eight vessels, each 57,000 deadweight tons, has not started.

In addition, the ship maker has delayed the delivery of three vessels to Qingdao Ocean Shipping Co and COSCO (Hong Kong) Shipping Co Ltd. The three vessels, each also 57,000 DWT, were to have been delivered between June and December last year but will now arrive between August and October.

China COSCO Chairman Wei Jiafu said in April the company might delay or cancel new vessels because of the country's slowing demand for iron ore.

"The cancellation and the rescheduling of the orders are inconsistent with the company and shareholder's interests," the company said.

New ship orders in the first five months amounted to 1.18 million DWT, 96 percent less than the same period last year, the Ministry of Industry and Information Technology said.

China COSCO shares shed 1 percent to 15.92 yuan on the Shanghai market yesterday.


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