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Kawasaki delays Dalian expansion

Kawasaki delays Dalian expansion

Tokyo:  Kawasaki Heavy Industries' shipbuilding venture in China will delay operations of a second dock in Dalian by three years as the global recession dries up demand, writes Bloomberg. The second dock, originally slated for operations in early 2012, may be postponed until 2015, said Yusuke Kamada, a spokesman at Kobe, Japan-based Kawasaki. The Dalian yard is being funded by the Kawasaki group and China Ocean Shipping Group Co., or Cosco.

"We haven't got a single order" for new ships since the fourth quarter, Tomokazu Taniguchi, the president of Kawasaki's shipbuilding unit, said in an interview in Tokyo yesterday. Kawasaki will also offer technical assistance on the new dock, he said.

The financial crisis ended a five-year shipping boom in the fourth quarter of 2008, prompting Asian yards to scale back spending. Taniguchi, 62, forecast ship orders would fall by more than half this fiscal year, instead of an April target for a 54 percent increase to 110 billion yen ($1.1 billion).

Orders from Japanese shipyards, the world's second-largest by output, tumbled 90 percent in May, and have fallen 81 percent since the beginning of this year, according to the Japan Ship Exporters' Association. Global orders for 807 new ships were canceled in the October to May period, Tokyo-based Mitsubishi Heavy Industries Ltd., Japan's third-largest shipbuilder by sales, said June 4 in a presentation.

Construction of the first and second docks in Dalian, northeastern China, will be completed around May 2010, Kamada said. The shipyard will have the capacity to produce 10 very large crude carriers, or VLCCs, a year after the second dock is completed, Taniguchi said.

Kawasaki's 50-50 venture with Cosco, called Nantong Cosco KHI Ship Engineering Co., or Nacks, was created in 1995. The capacity of Nacks' docks in Nantong, eastern China, has already surpassed Kawasaki's main yard in Sakaide city, southwestern Japan, Taniguchi said. The existing Chinese yard can also build 10 VLCCs annually.

The Nantong yard builds large-size dry bulk carriers, container ships and car carriers, and half of the vessels built at the yard are designed for Cosco, Taniguchi said. The new production site in Dalian will build VLCCs and iron ore carriers. Kawasaki will continue to focus on liquefied natural gas tankers at its Japanese docks, he said.

Kawasaki Heavy's sales from shipbuilding, the origin of its businesses, accounted for 9 percent of its total revenue for the year ended March 31. The company also makes motorcycles, airplanes, trains and industrial plants.  [07/07/09]