TITAN Petrochemicals Group Ltd is building China's biggest ship-repair yard to cut the tanker operator's reliance on shipping oil.
The company agreed last month to buy a yard in China for US$170 million and will use it for building, repairing and converting tankers and supertankers, known as very large crude carriers, and for making oil rigs and drilling platforms, Bloomberg News reported.
"If demand for ships in the world continues to go up, demand for ship repair will go up," Chief Executive Barry Cheung said before a tour of the site in Fujian Province, southeast China, on Sunday. Meanwhile, "we expect the VLCC markets won't be very strong. Rates will continue to be under pressure."
Titan Petrochemical is following a similar move made by COSCO Corp Singapore Ltd, a unit of China's biggest shipping line, which turned itself into a ship-repair company and reduced its reliance on operating bulk vessels.
The cost of transporting oil products from the Persian Gulf to Japan has fallen for six straight weeks, tumbling 30 percent, according to the Baltic Exchange in London.
Cheung, 49, is diversifying into shipbuilding and repairs and also plans to make Titan China's biggest independent fuel storage provider. Shipyards in China and South Korea, the world's two biggest shipbuilding nations, have been winning more orders on soaring demand for vessels to transport raw materials to China and completed goods to the US and Europe.
In the past five years, vessels on order have more than doubled to 6,900, while prices have risen by more than 50 percent, according to a report by Drewry Shipping Consultants Ltd.