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Yuan in, dollar out at Cosco Corp

Yuan in, dollar out at Cosco Corp

Singapore: Singapore-listed shipyard Cosco Corp has begun quoting new sales contracts in Chinese yuan to reduce the impact of any further decline in the U.S. dollar, the company's president said Monday.
'We have already started quoting (new contracts) in Chinese renminbi,' Cosco President Ji Hai Sheng told Dow Jones Newswires. 'Some customers may accept it and some may not.'
Cosco now has contracts worth $6.5 billion denominated in U.S. dollars, but labour costs at its Chinese shipyards are paid in yuan. So far this year, the Chinese currency has gained 4.3% against the US dollar, reflecting an annualized rise of 17.4%.
Cosco is also trying to re-negotiate the terms of some past contracts to address the rise in the yuan as well as higher steel and labor prices.
'We are talking to our customers about it,' Ji said.
According to analysts, a 10% increase in steel prices will reduce Cosco's net profit by 4%. Steel, which is generally priced in U.S. dollars, accounts for 20% of input costs for shipbuilding. [01/04/08]



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