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Sinopacific sees three more tough years ahead for bulkers and OSVs

Sinopacific sees three more tough years ahead for bulkers and OSVs
China’s Sinopacific Shipbuilding Group, whose core businesses in bulk carriers and OSVs are presently going through weak market conditions, is bracing itself for a further three tough years ahead, according to its ceo Jiang Qiang.

“The next three years will not be good. But it is a good opportunity for us to look within to improve our capabilities and focus on revamping our internal management, enlarge our R&D and enhance both the quality of our products as well as our capabilities in lean manufacture,” Jiang told Seatrade Maritime News.

Jiang, who took over as ceo in July from his predecesor Simon Liang, maintained that Sinopacific continues to be one of the global market leaders with its inhouse designed Crown brand of bulk carriers and SP brand for OSVs. The company will also explore further markets in offshore construction vessels (OCVs), oil tankers and small/medium size containerships while manufacturing hulls for gas carriers contracted by SOE (Sinopacific Offshore & Engineering).

In July, the privately-owned shipbuilder won an order to build nine AHTS vessels for Middle East’s Adnoc and its subsidiary ESNAAD.

“Going forward, whilst the two markets for our main product ranges (bulk carriers and OSVs) are currently not doing well, the medium to long term prospects remain positive,” Jiang said.

In the first seven months of this year, Sinopacific delivered 23 ships, including both bulkers and OSVs. The yard has 83 new vessel orders on hand and it aims to deliver 45 vessels this year, giving the yard a 15% year-on-year increase in vessel production value.

In order to complete the construction of all the existing 83 newbuilding orders, the shipyard needs supporting finance. However, the financial environment is not as good as hoped. Banks have turned cautious toward financing shipyards amid the crash in oil prices and the lingering overcapacity within the shipbuilding industry, Jiang noted.

As part of Sinopacific’s plan to ease its cash flow pressures and to continue to focus on its core products, the company sold its 29.95% stake in SOE to CIMC Enric Holdings, an affiliate of China International Marine Containers (Group) Co (CIMC). The remaining 36.69% stake in SOE continues to be owned by Evergreen Group, which also owns a 65.7% stake in Sinopacific.

SOE, established in 2006, deals principally in the design and manufacturing of small and mid-size gas carriers, for LEG, LPG, LNG transportation, as well as the design and construction of topside modules for the oil and gas industry.

Jiang said that cooperation between Sinopacific and SOE has not been compromised as a result of the transaction, and the new investor, CIMC Enric, is ideally placed to grow SOE’s business.