April 5, 2012 / 10:09 AM / 5 years ago

China Rongsheng may see capesize order cancelled-source

HONG KONG, April 5 (Reuters) - China Rongsheng Heavy Group Holdings Ltd, the largest shipbuilder listed in Hong Kong, may face the cancellation of an order for a $70-80 million capesize vessel amid a global shipping slump and tight credit conditions, an industry source said.

Offers were invited on a 176,000 dead weight tonne (dwt) capesize resale this week, which is controlled by Rongsheng Heavy Industries in China after the contract was cancelled with the original owners, said a recent report of Clarkson Research Services Ltd.

Delivery of the capesize was delayed but the contract had not been cancelled yet, the source with direct knowledge of the issue told Reuters.

"A downpayment of more than 50 percent was paid by the European owner, so even if the order is cancelled, Rongsheng will still make a profit by a resale," he said.

Rongsheng officials were not immediately available for comment.

Clarkson said the ship may have been committed to European interests for around $38 million.

The international shipping market has been hit by a supply glut, slowing global economic growth and the European debt crisis. The continued industry downturn triggered fears of more delay or cancellation of ship building contracts.

Rongsheng has said that there were delays in delivery of more than 10 vessels last year due to the European debt crisis.

Shares in Rongsheng, which lost 68 percent of their value last year, have fallen 8.4 percent this year to close at HK$1.96 on Thursday. (Reporting by Alison Leung; Editing by Kim Coghill)

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