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| Shagang dispels ownership aims |
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| PostTime:2010-07-30 07:50:25.0 View:30 |
| A private steel producer with foreign iron-ore reserves says it will not get into shipowning. China's largest private steel producer has dismissed rumours it is planning to set up a fleet to exploit its foreign iron-ore reserves. Jiangsu Shagang Group has become increasingly confrontational with its suppliers in recent months as it responds to the increasing cost of iron ore. The stand-off led to China's fifth biggest steel producer refusing to buy any imported iron ore on the spot market in May, before it backed down a month later, accepting a 25% increase from Australian mining company Grange Resources. Shagang agreed to that deal as plummeting freight rates meant it could withstand the rising ore costs, say market commentators. But in the long term, it was said to be focussing on developing iron-ore reserves it has in Australia. The steel giant imports about three million tonnes (MT) of ore from these reserves, a figure that is set to more than double in the coming years. Shagang has relied heavily on long-term charters with leading shipowners to import both these reserves and contracted ore. While a source at the company says a recent drive to set up charters may have come to an end, the steel group will not be considering following steel giant Baosteel Group in purchasing vessels. "We do not have a plan to own a fleet at present," the he said. "Our goal is to satisfy our logistics demands only." Shagang recently signed a 10-year charter for two capesizes recently acquired by Pacific Shipping Trust (PST). The ships, which are on order at Hyundai Heavy Industries, were purchased by PST from Japanese trading house Mitsubishi Corp. Shagang will pay $27,000 per day. Last year, the steel group also inked a similar 20-year agreement with Nippon Yusen Kaisha (NYK) to ship iron ore from Australia and Brazil to China. It chartered Diana Shipping's 177,700-dwt capesize Houston (built 2009) for five to six years. The vessel was built jointly by Shanghai Jiangnan-Changxing Shipbuilding and Shanghai Waigaoqiao Shipbuilding and was delivered last November. In addition, Shagang has a "strategic co-operation framework agreement" with China's number two shipping company, China Shipping Group (CSG). However, Shagang's supply needs are now accommodated by its current chartering agreements, the source claims. "We do not intend to charter in more vessels," it said. |
| Source:Tradewinds Author: |
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