China's Yangzijiang Shipbuilding Group is looking to enter the VLCC segment by acquiring a “half-built” newbuilding from a compatriot shipyard.
Industry sources said Yangzijiang is in talks with Jinhai Intelligent Manufacturing, formerly Jinhai Heavy Industry, to buy the 300,000-dwt crude carrier that has been standing in the yard for more than two years.
The VLCC newbuilding was originally ordered by GC Tankers, a unit of China’s HNA Group.
One shipbuilding expert said Yangzijiang’s interest in acquiring Jinhai’s half-complete newbuilding mirrors a move it made three years ago in entering the suezmax tanker sector.
Yangzijiang paid about $10m to take over the half-built, 157,000-dwt newbuilding that was dry-docked at Jiangsu Rongsheng Heavy Industries. The suezmax tanker was originally ordered by John Fredriksen’s Frontline in 2012, but Rongsheng stopped building the ship when the yard group suffered financial problems.
Yangzijiang was said to have completed construction of the suezmax early this year by spending less than $40m. Germany’s Hammonia Reederei was reported to have paid a price “in the high $50s” for it and has named it Aura M (built 2020).
A source familiar with Yangzijiang confirmed that the shipyard is keen to acquire Jinhai’s incomplete VLCC newbuilding.
“Yangzijiang has been trying to buy over the half-built vessel for more than two years but did not succeed because Jinhai was stalling,” he said. “However, talks between the two companies have never stopped.
“There are complex issues at Jinhai…the shipyard is not bankrupt, but it has stopped shipbuilding constructions for almost three years and has rented out its dry docks to shiprepairing company.
“It wants to sell the half-built VLCC and a few incomplete mega-size containerships, but it needs approval from the local government. There were a few rounds of changes in the shipyard’s management team and this complicates discussions.”
Officials at Jinhai and Yangzijiang were unavailable for comment.
The ownership of Jinhai appears to be a question to many shipbuilding players. The shipyard is a subsidiary of troubled HNA Group, which went under the administration of the Hainan government early this year.
Jinhai was established in 2006 during the shipbuilding boom by businessman Huang Shang Nian, under the name of Jinhaiwan Shipbuilding Group.
Grand China Shipping, the shipping arm of HNA Group, started investing in Jinhaiwan after the global financial crisis and the collapse of Lehman Brothers. By 2009, HNA Group had become the shipyard’s major stakeholder with a 70% stake.
Grand China first renamed the yard Jinhai Heavy Industry and, in 2017, changed that to Jinhai Intelligent Manufacturing.
Yangzijiang is widely known for building containerships and bulk carriers. But the company also delivered two 27,000-cbm LNG/ethane multigas carriers in 2017. It is currently building four MR tankers for its own shipping arm, Yangzijiang Shipping.