YZJ Shipbuilding wins US$126m in new orders from SITC

YANGZIJIANG Shipbuilding has entered into an agreement with Hong Kong container shipping firm SITC International Holdings for the building and delivery of a dozen 1,800 twenty-foot equivalent unit (TEU) containerships, it said on Monday.

Out of the orders for the 12 vessels, six are firm orders worth US$126 million in total.

Separately, SITC can also exercise six option orders for identical vessels, to be exercised in three stages, at two options each. If all the options are exercised, this batch of orders will be worth US$252 million in total, the group said.

The six firm orders will be delivered between the second quarter of 2022 and the first quarter of 2023.

Further to the new order update in the group's financial announcement for the first half of FY2020 on Aug 5, YZJ Shipbuilding has also secured orders for two 82,000 DWT (deadweight tonnage) dry bulkers.

With these latest order wins, the group has secured new orders for 23 vessels worth approximately US$700 million (not considering the value of the option orders) so far this year, it said.

SITC has been a customer of Yangzijiang for four years. With the latest batch of orders, SITC has placed orders for 15 containerships with a total contract value of US$372 million.

YZJ Shipbuilding chairman and chief executive officer Ren Letian said: "This is the fourth batch of orders that SITC placed with Yangzijiang, and it is an endorsement from SITC on the quality of our vessels and customer service...

Over the past decade, Yangzijiang has established a portfolio of containership products, from the smaller ones to 10,000 TEU, 11,800 TEU and 12,690 TEU containerships for some of the major shipowners in the world.

Separately, the group noted that maritime consultancy Sea Intelligence has reversed its bearish forecast for the boxship industry, and now forecasts that global container liners could see a total profit of US$10.7 billion to US$15.4 billion for 2020, compared to US$5.9 billion for 2019.

Container freight volumes is also forecast to decrease by only 0.1 per cent in the third quarter of 2020, said Sea Intelligence.

YZJ Shipbuilding said: "The counter-intuitive conclusion was based on three factors, including consumption patterns shifting from services to physical goods, savings from travelling and regular outings giving financial means for more consumer products, and the need for furnishing home office."

YZJ Shipbuilding shares rose half a Singapore cent or 0.55 per cent to S$0.915 on Monday.