Korean Shipping messenger

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1 Korean Shipping messenger A collection of articles and daily news for the shipping industry with focus on the Korean shipping and shipbuilding markets. 15 October 2012 Shipbuilding News Kouan talks more newbuildings China's Taizhou Kouan Shipbuilding is said to be in talks with Germany s Harren & Partner about building more newbuildings. Details on the ship type, size and price are yet to be revealed. The German shipowner recently took delivery of the Pabal, the first of two 76,000-dwt ice-class bulk carriers from the yard. Taizhou Kouan is scheduled to deliver the Pabur, a sistership to the Pabal, in early December. Both panamaxes were ordered in early 2011 with a charter fixed. Yards vie for KOTC tankers Korean and Chinese shipyards are competing to win three very large gas carriers (VLGCs) from Kuwait Oil Tanker Co (KOTC). Sources say price may not be imperative for KOTC, which is also looking to order four MR tankers by the end of the year. Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries are said to be quoting VLGCs at $72m. However, John Fredriksen s Frontline 2012 ordered new VLGCs at the Jiangnan Shipyard in China in June for a new low of $63.5m per ship. STX Dalian and Dalian Shipbuilding Industry are also regarded as contenders for the KOTC order. HMD to reach $3.2bn orders Hyundai Mipo Dockyard is expected to achieve yearly order target this year. Analyst Jun Jae-Chun of Daishin Securities said "Hyundai Mipo has reached 57% of 2012 order target, having inked a total of $1.83bn (40 vessels) year-to-date." He said "Hyundai Mipo will be able to win overall $3.2bn in the whole year of 2012, as targeted." "However, despite a relatively strong orders for product carriers, the shipyard seems difficult to score $3.6bn of targeted revenue." Meanwhile, the Korean shipbuilder is prospected to see lower proportion of turnover in bulker, while higher in LPG carrier, car carrier, etc. Also, operating margin of shipbuilding division, on consolidated basis, will increase up to 3.5%, he forecasted. HMD wins 1st juice carriers Hyundai Mipo Dockyard is said to have won an order for two fruit-juice carriers for the first time for the Korean yard. The 23,000-dwt stainless-steel juice carriers are said to have been booked by Swiss-based Atlanship. The newbuilding price is reportedly more than $40m each. Industry players say they will be delivered from the end of 2013 by Huanghai wins cargo-passenger ship China s Huanghai Shipbuilding has won an order for a cargo / passenger ship from Compagnie Polynesienne de Transport Maritime (CPTM). Newbuilding price is not revealed for the vessel to be delivered by July Industry players say the 124-metre hull will be based on the design of a multipurpose general cargo ship with a capacity to carry 3,300 tons of cargo and 171-teu containers. The vessel would be able to accommodate up to 300 passengers. Avic acquires Deltamarin China's Avic International has agreed to buy Finnish ship designer Deltamarin in a deal worth around EUR 32m. Avic is to acquire 4,650 shares in Deltamarin, a 100% stake. Avic said the acquisition would contribute to its growth strategy in shipping. Deltamarin designs sustainable and energy-efficient vessels.

2 Wartsila engines for 6 newbuilds Wärtsilä, the marine industry s leading solutions and services provider, is to supply its recently introduced Wärtsilä X72 licensed engines to power six new vessels for two Singapore based shipping companies. Wärtsilä equipment will be installed on four container vessels that Pacific International Lines (PIL) has ordered from Dalian Shipbuilding Industry Company (DSIC), in China, and on two bulk carriers being built by Bohai Shipbuilding Heavy Industry Co. Ltd. (BSHIC) also in China. The Wärtsilä X72 has been selected as the main engine for these ships, with delivery of the first engines scheduled for early The order was received in the third quarter of The Wärtsilä X72 engine offers exceptional efficiency and fuel consumption performance to provide a favourable Energy Efficiency Design Index (EEDI). Furthermore, the improvement in fuel consumption, when compared to conventional marine engine options, results in correspondingly reduced CO2 emissions. The maritime sector continues to confront the need to achieve lower operational costs and better environmental performance. The Wärtsilä Generation X engines were specifically developed to address these needs, and we are confident that in selecting the Wärtsilä X72 engine for their new ships, these owners will reap substantial benefits, says Martin Wernli, Vice President, Wärtsilä Ship Power, 2-stroke. In fact, compared to similar vessels that have recently been delivered, the bulk carriers fuel consumption can be reduced by approximately 5 tons/day, while the container vessels can achieve savings of 4 tons/day. Wärtsilä launched its low-speed Generation X engine series in May 2011 with two mid-sized engines, the Wärtsilä X62 and Wärtsilä X72, designed specifically for merchant vessels that use mid-size, low-speed engines; such as Panamax to Capesize bulk carriers, Aframax to Suezmax tankers, and Feeder to Panamax container vessels. The series includes also the Wärtsilä X35 and X40, which cover the small bore end of the market, such as small bulk carriers, product tankers, general cargo vessels, reefers, feeder container ships, and small LPG carriers. The first of these electronically controlled, low speed engines was started in November 2011 and passed its factory test in February The recently introduced Wärtsilä X92 is a direct response to the container shipping industry s move towards larger ship sizes and more efficient propulsion systems. To date, a total of 24 Wärtsilä Generation X engines have already been ordered since their market introduction. This new engine series has numerous features that provide greater operational efficiencies with a reduced environmental impact. These include extended rating fields that offer the optimum propeller speed for different applications, low fuel consumption resulting from the advantageous stroke-to-bore parameters, the well-proven Wärtsilä electronically controlled common-rail system for high performance, tested reliability, an extended interval period of five years between overhauls, various tuning methods optimized for several vessels applications, and stable operation down to 12% of the nominal engine speed for easier manoeuvring. The overall reliability of these engines, together with the lower fuel costs and reduced maintenance expenditures that they offer, leads inevitably to a lower total cost of ownership. The performance of these Wärtsilä engines can be simulated on-line at Wärtsilä NetGTD (General Technical Data). Brazil's OSX Gets Approval for $736 Million Merchant Marine Fund Loan The Merchant Marine Fund will make available an additional credit line of up to 1.5 billion Brazilian reais ($736 million) to finance OSX's shipyard at the Acu port in northern Rio de Janeiro state. OSX previously received BRL2.7 billion from the fund via loans from state-run banks Caixa Economica Federal and the Brazilian National Development Bank, or BNDES. While the Merchant Marine Fund has approved the availability of the financing, OSX still needs to agree to terms with banks acting as the fund's agent, a spokeswoman for the company said. OSX is part of a rebirth in Brazil's shipbuilding sector, driven by expected demand for ships, platforms and drilling rigs as the country develops recently discovered oilfields off the country's coast. Brazil was once one of the world's largest shipbuilding countries before an economic downturn in the 1980s caused the sector to nearly shut down. OSX is positioning itself as a key player in the renaissance of Brazil's shipbuilding industry, one of a series of new shipyards under construction to meet demand for oil platforms and drilling rigs the government wants to build in the country. Oil companies operating in Brazil are obligated to use a certain percentage of locally produced goods and services under strict local content rules. The shipyard is expected to start operations in the first quarter next year. MHI Receives Order for 2 Next-Generation Pure Car and Truck Carriers for NYK Line, Jointly with Imabari Shipbuilding Mitsubishi Heavy Industries, Ltd. (MHI), jointly with Imabari Shipbuilding Co., Ltd., has received an order to build two next-generation pure car and truck carriers (PCTC) for Nippon Yusen Kabushiki Kaisha (NYK Line). Formal contract signing will take place soon. In building the two vessels, MHI will provide Imabari with design information on PCTC incorporating advanced ship technologies, including installation of various devices and systems to reduce environmental burdens, such as the Mitsubishi Air Lubrication System (MALS). Imabari will contribute significantly to the project through its strong cost competitiveness. The newly designed car carriers will feature an over-panamax* size hull, and their advanced energy-saving technologies are expected to enable a over 30% reduction in fuel consumption per loaded vehicle

3 compared with existing ships. The two ships are slated for completion in Each pure car carrier on order will be 200 meters (m) in length, 35m wide and 38m in draft, with capacity to carry approximately 7,000 vehicles. The larger ship size is being adopted in anticipation of the planned expansion of the Panama Canal, which is expected to reach completion in the autumn of MALS is MHI's proprietary technology that reduces frictional resistance between the ship hull and seawater by introducing a layer of air bubbles blown from the ship's bottom. In addition to MALS and an electronically controlled Mitsubishi-UE marine diesel engine, the new vessels will adopt the Mitsubishi Hybrid Turbocharger, a generator-integrated hybrid MET turbocharger for marine diesel engines that utilizes exhaust gas not only to drive the turbocharger but also, using its waste heat, to generate the vessel's electric power supply while at sea. The new design will also employ an MHI windscreen at the ship's bow that reduces wind resistance from headwinds and a Mitsubishi Energy Saving Hybrid Inverter Pump (MESHIP), an inverter-controlled cooling seawater pump that enables optimized energy-saving pump operation according to the main engine's operating conditions. Based on MHI's design concept and technologies related to energy saving, Imabari will undertake aspects from the basic design through actual ship construction. MHI will also supply various core components, including the main engines, propellers and MALS. Even before this latest development, MHI and Imabari have already been in a fruitful collaborative relationship. In May this year, the two companies agreed to collaborate on technology relating to container ships. That initiative aims at establishing a structure to strengthen and expand the two companies' high value-added container ship businesses by effectively integrating MHI's design capabilities and Imabari's shipbuilding capacity and strong cost competitiveness. In July, MHI further agreed to license the manufacture and marketing of its deck machinery to Imabari. MHI has adopted a long-term strategy for its shipbuilding and ocean development business to focus on high valueadded vessels, such as cruise ships and next-generation LNG carriers, and to strengthen its engineering operations by providing proprietary technologies to other companies both in Japan and abroad. Imabari has been seeking to further enhance its advanced ship-related technologies, including energy-saving features. The intentions of the two companies thus meshed and led to the conclusion of the new collaborative agreement. Gathering momentum from the selection of its design concept for NYK Line's next-generation PCTC, going forward MHI now intends to ratchet up its proposal-based marketing activities in a quest to further expand its engineering business. Note: "Over-Panamax" refers to ships that are too large to pass through the existing Panama Canal. Panamax parameters are 294.0m in length overall (LOA), 32.3m in width and 12.0m in draft. When the canal's planned expansion is completed in 2014, the size of passable ships will increase to 366m in LOA, 49m in width and 15.2m in tropical freshwater (TFW) draft. Samsung wins offshore winds complex Samsung Heavy Industries and Korea Southern Power (KOSPO) builds Korea's first offshore wind turbine complex in Jeju Island. Samsung signed a contract to build 12 units of 7MW offshore wind turbines with a special purpose company invested by Samsung and KOSPO, announced on October 14. The Geojae-based builder plans to finalize the construction by the end of 2014, which enables to start commercial operation from Moreover, since KOSPO plans to expand the complex up to 200MW, Samsung is expected to ink additional contract. Samsung will be in charge of engineering, procurement, construction and installation of turbines, as well as jackettype wind turbine foundation. Therefore, Samsung will be credited for its all-around capability in offshore wind turbine project. Shipping & Business News KDB finances 10 VLOCs Korea Development Bank revealed on October 12 that it provides finances for domestic medium-sized Polaris Shipping for sale and lease back of ,000-dwt very large ore carriers. Now Polaris will carry out the 12-year long-term transportation contract signed with Brazil's Vale group, as in accordance with the plan. The Korean shipping company will earn up to around $4bn by operating 10 VLOCs. An official from KDB said "Amid troubled shipping market, we successfully came to finance Polaris and will be a strong supporter." Cargill goes green at sea [Star Tribune (Minneapolis)] These days, when Cargill Inc. charters a ship to move agricultural products around the world, the company doesn't just ask about the rent, it checks the maritime equivalent of miles per gallon and emissions. If the ship's a fuel-guzzling polluter, Cargill looks for another vessel.

4 The giant Minnesota agribusiness has chosen to take the world on a unique new voyage: It hopes to discover a way to make money by going green on the deep blue sea. The idea that one of the world's biggest shippers can help the environment without hurting itself economically may seem contradictory. It isn't, said Peter Boyd, chief operating officer of the Carbon War Room, an international nonprofit group that helped talk Cargill into leading a corporate revolution against climate change. "These guys are looking far ahead," Boyd said in an interview from London. The movement "needs an innovator and they don't mind being first." Cargill will determine which vessels to charter using a seven-tier rating system. The system ranks individual ships in each class of the world's commercial fleet. Ratings go from most to least energy efficient. Cargill and two other pioneers -- Huntsman Corp. and UNIPEC UK -- have pledged not to use vessels in the two least efficient categories. "There are some [energy efficient] technologies out there," said Tom Beney, president of Cargill Ocean Transport USA, a Cargill subsidiary. "We want to put a stake in the ground and say let's try some of these things. There's a lot of talk and not a lot of action." So Cargill acted. The company believes it makes economic sense to ship only on vessels that consume less fuel and produce less carbon dioxide that contributes to climate change, Beney said. But, he added in an interview, Cargill and its customers are becoming more focused on "a sort of greening of the supply chain." That means Cargill will say no to fuelguzzling, polluting vessels, even if they are cheaper to operate overall. "Our customers will say, 'We want to do business with Cargill because they're taking a responsible attitude toward this,'" Beney said. "There are others who couldn't care less." The corporate commitment to more energy efficiency and less air pollution was the culmination of discussions with Carbon War Room, which dedicates itself to finding "opportunities to make money and reduce carbon at the same time." Eventually, Cargill hopes to experiment with huge, high-flying "sky sails" that can be attached to giant ships to augment fossil fuels with wind power. "It's a bit like kite surfing," Beney said. "We're far away from that." For now, the company will rely on an energy efficiency rating system built by RightShip, a company in which Cargill bought a one-third share in RightShip uses a complex mathematical formula to estimate an individual ship's carbon dioxide emissions per ton and per nautical mile. "We're comparing ship types and ship groupings with each other," Beney explained. "Now we've got a basis on which to decide whether a ship is an efficient ship or not an efficient ship." Engine adjustments The easiest way to save on fuel and cut pollution is to cruise at reduced speeds, something called "ultra-slow steaming." The practice can save $40,000 to $50,000 in fuel costs on a 30-day voyage, depending on the size of the ship, Beney said. But it requires adjustments to many existing ship engines. "You really have to change the technology because you could potentially do some damage to the engine if you run it like that consistently," Beney explained. At the same time, Boyd believes that if everyone in the shipping industry follows Cargill's lead, savings in fuel costs could be $70 billion a year while simultaneously reducing carbon dioxide emissions by 300 million tons. Boyd also thinks Cargill's position as a world shipping leader will bring others on board. "We're a little bit of an 800-pound gorilla in the dry bulk market," Beney admitted. "But we're not the only people out there." He said Cargill Ocean Transportation is involved in the Sustainable Shipping Initiative, a group of 15 large organizations that are working to create a sustainable future for shipping. The effort did not get off to a great start with some ship owners. In a statement to the Star Tribune, the shipping association BIMCO warned against "making commercial decisions on the basis of flawed indications of specific ships' operational energy efficiency." Owners generally worry that a boycott of certain vessels will force them to make expensive adaptations to engines and hulls without realizing any savings for themselves. The Carbon War Room's Boyd conceded that right now the bulk of savings accrue to shippers, not ship owners. The challenge will be to find a carrot to go with the stick, he said. "That might mean charterers share some of their savings with owners." For Cargill, it could even mean buying stakes in some ships,beney said. "We believe we'll be in a high-priced fuel environment for the foreseeable future," he noted. "The industry needs to tackle that in a much more rigorous way than it's doing today." Shipping estimates cut on slowing production Rates to ship liquefied natural gas will be lower than previously forecast through 2014 because of slowing growth in production of the fuel, according to RS Platou Markets. Short-term charters for the vessels will average $138,000 a day next year and slump to $84,000 in 2014, lowering last quarter s estimates of $142,000 and $104,000, the Oslobased investment bank said in an ed report last week. First-half output of the fuel trailed industry expectations and a lack of export facilities due for completion in 2014 will further curb fleet usage, Jorn Bakkelund, an analyst at RS Platou Economic Research, said in the report.

5 With a phenomenal amount of investments taken to build more liquefaction capacity worldwide, the demand for LNG shipping looks bright, Bakkelund said in the report. Japanese power plants are drawing cargoes from the Atlantic to compensate for lost nuclear power in the Asian country, constraining vessel supply, Bakkelund said in the note. The anticipated slide in rates in 2014 may encourage longer-distance shipments, the note said. Increasing transport distances lifted rates amid slower volume growth, according to the report. Shipping demand rose almost 7% in the year s first half as voyages lengthening 9% offset a 2% decline in cargoes, Platou estimates. The trend may reverse as new projects are built closer to importers and Qatar, the world s largest exporter, sells volumes to Asia on medium-length contracts, reducing the need to divert cargoes from the Atlantic, Bakkelund said in the report. With Japan gradually phasing in nuclear power plants and few export facilities in Asia until 2015, average transport distances will remain high in the coming two to three years, he said. Fujian-Jichai Power forms JV Fujian Shipbuilding Industry Group and China National Petroleum Corporation (CNPC)'s full subsidiary Jichai Power have signed an agreement on October 11 to jointly invest in a marine engine assembly factory in Lianjiang Industrial Zone, Fujian province. Operation of the factory is to start before September next year. Besides, the JV will also start a joint venture in Fuzhou in order to develop businesses of marine engines in the regions of South China, Taiwan and Southeast Asia. Korean Shipping Messenger Daily News Report is released and distributed freely by Mutualmar. The information in this report is derived from a variety of sources, public and private and Mutualmar explicitly does not claim it is the source of this information. While Mutualmar has used reasonable efforts to include accurate and up-to-date information in this report, makes no warranties or representations as to the accuracy of any information contained herein or accuracy or reasonableness of conclusions drawn there from. Mutualmar assumes no liabilities or responsibility for any errors or omissions in the content of this report.