The nation's largest steelmaker Baosteel and shipping
conglomerate China Shipping Group will form a joint venture that
would provide Baosteel with ships for iron ore imports.
"It (the joint venture) will help Baosteel to control shipping
costs and help China Shipping to increase market share," Li Shaode,
president of China Shipping, said yesterday.
The joint venture will provide Baosteel with two 300,000-ton
bulk cargo ships and four 230,000-ton bulk ships. Baosteel, which
relies heavily on iron ore imports, will use five of the ships and
the sixth will be leased to other companies, Li said.
The joint venture will be 51 percent owned by China Shipping and
49 percent by Baosteel. It will be registered in Hong Kong. The
joint venture will begin operation this quarter with registered
capital of $8 million, accounting for 20 percent of the ship
manufacturing fee.
"The total loading of the joint venture is expected to double to
3 million deadweight tons by 2015," Li said.
Gao Bo, an analyst at Mysteel website, said the joint venture
will help Baosteel to control its shipping costs as global sea
transport costs soar.
"It is also in line with Baosteel's strategy to diversify its
business and will help Baosteel to gain profits," Gao said.
Xu Lejiang, chairman of Baosteel, said yesterday the steelmaker
had not yet decided to accept the 65 percent price rise in talks
with the world's three largest iron ore producers.
But analysts said Baosteel would probably accept the terms going
by previous negotiations, which will largely increase the company's
costs.
"Baosteel will raise steel product prices for the second quarter
by the end of this month," Xu said.
Baosteel's iron ore imports were around 34 million tons in 2007
and its steel production capacity was 23 million tons in 2006.
China Shipping now owns 436 ships with a total loading of 17.68
million deadweight tons. Its annual transport capacity was 370
million tons.
(China Daily February 22, 2008)
