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09-Jan-2012
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The growing crisis for Grand China, part of the powerful, Hainan-based HNA Group, comes amid growing concerns for owners of ships for iron ore, coal and other dry bulk commodities about Chinese companies’ willingness to renege on long-term contracts.
China’s Cosco, operator of the world’s largest dry bulk ship fleet, halted payments on some long-term charters in mid-2011 to force owners to cut the rates they were charging. Cosco eventually backed down after owners threatened large-scale seizures of the company’s ships.
Since then, at least five shipowners or ship managers worldwide have complained that GCL has been late making payments on ships it had chartered. In a separate case, New York-listed Diana Shipping said in December it was owed $4.8m for charter of the M/V Houston, which it had chartered for five years to China’s Shagang Shipping. Shagang is part of the Jiangsu Shagang steelmaking group.
GCL will substantially increase its debts to shipowners by handing the vessels back, because it will immediately become due to make the outstanding payments for the remainder of each contract.
The Vafias Group, which last year successfully pursued GCL and HNA for non-payment in the English and US courts, is seeking $18.6m in the US courts after GCL handed back early a vessel it was due to charter until 2015. Oslo-listed Golden Ocean, one of the world’s most important dry bulk shipowners, said late on Thursday it had reached agreement on an undisclosed compensation payment after a charterer handed back one of its vessels – the Ocean Minerva – a year early. The charterer, which is known to be GCL, is due to pay the compensation by the end of February.
On another front, United Bunkering & Trading, a Hong Kong-based supplier of bunker fuel – as ships’ fuel is known – has asked a US federal judge to seize a GCL vessel in port so that it can recover money it is owed. United Bunkering declined to give details of the case, saying the arrest – as such seizures are known – was still under way.
GCL and Shagang both chartered Capesizes, the largest vessel type, for more than $50,000 a day. Because Capesizes in the short-term spot market currently earn only around $18,000 a day, such contracts are now heavily lossmaking.
The FT was unable to reach GCL for comment on Friday, although it has previously said it is working towards clearing the arrears. Shagang Shipping did not respond to an emailed request for comment.
China’s Cosco, operator of the world’s largest dry bulk ship fleet, halted payments on some long-term charters in mid-2011 to force owners to cut the rates they were charging. Cosco eventually backed down after owners threatened large-scale seizures of the company’s ships.
Since then, at least five shipowners or ship managers worldwide have complained that GCL has been late making payments on ships it had chartered. In a separate case, New York-listed Diana Shipping said in December it was owed $4.8m for charter of the M/V Houston, which it had chartered for five years to China’s Shagang Shipping. Shagang is part of the Jiangsu Shagang steelmaking group.
GCL will substantially increase its debts to shipowners by handing the vessels back, because it will immediately become due to make the outstanding payments for the remainder of each contract.
The Vafias Group, which last year successfully pursued GCL and HNA for non-payment in the English and US courts, is seeking $18.6m in the US courts after GCL handed back early a vessel it was due to charter until 2015. Oslo-listed Golden Ocean, one of the world’s most important dry bulk shipowners, said late on Thursday it had reached agreement on an undisclosed compensation payment after a charterer handed back one of its vessels – the Ocean Minerva – a year early. The charterer, which is known to be GCL, is due to pay the compensation by the end of February.
On another front, United Bunkering & Trading, a Hong Kong-based supplier of bunker fuel – as ships’ fuel is known – has asked a US federal judge to seize a GCL vessel in port so that it can recover money it is owed. United Bunkering declined to give details of the case, saying the arrest – as such seizures are known – was still under way.
GCL and Shagang both chartered Capesizes, the largest vessel type, for more than $50,000 a day. Because Capesizes in the short-term spot market currently earn only around $18,000 a day, such contracts are now heavily lossmaking.
The FT was unable to reach GCL for comment on Friday, although it has previously said it is working towards clearing the arrears. Shagang Shipping did not respond to an emailed request for comment.