Posted on November 4, 2024
Shanghai-based Hudong-Zhonghua Shipbuilding Co, a subsidiary of China State Shipbuilding Corp, signed yuan-based contracts to build 12 large container ships within the past 10 days.
On Monday, the shipyard announced that it had signed a contract with China Shipbuilding Trading Co and COSCO SHIPPING Lines to build six large container ships each capable of carrying 13,600 20-foot equivalent units (TEUs).
The order was signed just 10 days after the shipyard reached a similar deal to build six ships of the same type for Canadian tonnage supplier Seaspan Corp.
The deals, among the largest container ship orders signed in China this year, signal the currency’s steady expansion in the global shipping market, further raising the yuan’s international recognition, analysts said.
The 13,600-TEU container ship measures 336 meters in length and has a maximum capacity of 14,096 TEUs, while providing sockets for 2,000 reefer containers.
The settlement in yuan comes after a series of similar cases in recent years, and it reflects the Chinese shipbuilding industry’s rapid development and the yuan’s growing international status.
The use of yuan settlement will help reduce exchange risks and enhance the profitability of Chinese shipbuilders, raising their market competitiveness, Hudong-Zhonghua Shipbuilding Co said in a statement sent to the Global Times on Monday. Such an arrangement will also reduce financing costs and improve trade efficiency for shipowners, resulting in a win-win situation.
The company said that, up to now, it has signed deals for orders to build 21 vessels, of which yuan-based deals reached 15 billion yuan ($2.1 billion), contributing to the internationalization of the currency.
Wu Minghua, a veteran shipping analyst, told the Global Times on Monday that payments in yuan can expand the credit and loan business between banks and companies, allowing financial institutions to better support the real economy.
Ship owners won’t be under so much pressure in expanding their fleets if limited financial resources no longer constrain their ability to respond to market demand, Wu said.
The payment in yuan is unprecedented, displaying the currency’s growing financial value and expanding creditworthiness, Wu said.
China’s shipbuilding industry has maintained steady growth this year with major metrics rising in the first three quarters, data released by the Ministry of Industry and Information Technology showed on October 10.
China secured more than 70 percent of global green ship orders during the period, according to China Central Television.
