Singamas hit by China export slowdown

Sandra Tsui, Singapore - Thursday 11 December 2008

China's export market is affected by the current financial and economic turmoil.

THE world’s second largest container maker Singamas said it is operating at about 60% of its normal seasonal output level due to a slowdown in export trade from China. 

“The export market in China is being affected by the current financial and economic turmoil and accordingly, new container demand is also affected with orders began to level off from August and September of this year,” said chairman Chang Yun Chung today in a Hong Kong stock exchange filing. 

“Our factories are still operational but with the slow-down in export trade from China, we are now operating at about 60% of our normal seasonal output level with one shift production,” added Mr Chang. 

He also explained that container selling prices have been dropping since the prices of steel and other major raw materials began to fall since October. 

Mr Chang was trying to clarify some information that appeared in a recent report of a local newspaper which cited company’s chief financial officer Sylvia Tam saying that in a latest order for 20-foot containers, Singamas had accepted a price that was 16.7% lower than orders in October. 

“Container selling prices vary depending on customer’s specification. That is, higher specification would demand higher selling price. For the latest order that we concluded at $2,080, it is based on our factory specification, which is considered to be the lower specification at lower price,” said Mr Chang. 

The company said it had not had any order cancellation and has not closed factories, and it plans to shut down production for one month, as it does every year, for the Chinese new year in January 2009. 

On December 5, Ms Tam confirmed with Lloyd’s List by email that the firm had suspended production at its Indonesian factory, PT Java Pacific, which has an annual production capacity of 30,000 teu.

CIMC suspends dry container production

By Sandra Tsui - Thursday 4 December 2008

CHINA International Marine Containers. the world’s largest marine container maker, has brought forward its year-end holiday and suspended the production of dry marine containers due to exceptionally slow demand.

Shenzhen-listed CIMC, which has a 56% share of the world’s dry marine container market, halted all production lines of dry containers in October this year and 22,000 employees from the production department have been on leave since then, according to local reports. 

The company’s public relations department declined to confirm or deny the reports but when Lloyd’s List called the sales department trying to place an order for new dry 20 ft containers, an official from the department said the dry box production lines had already stopped operating for a period of time. 

The official said the firm still had stock of about 100 units of 20 ft containers and less than 100 units of 40 ft containers. Meanwhile, the firm would not re-open the production line unless a new order was big enough to cover the electricity costs for re-starting the line, he said. 

He said the production team usually went on holiday for 20 days to a month for Chinese New Year in the past years, but due to exceptionally low demand this year, the production team had started the holiday earlier than usual in October. He added that production of dry containers will resume after the coming Chinese New Year in February 2009. 

The production of reefer containers and other equipment were continuing as usual, he said. 

Recently, CIMC’s arch-rival Singamas has suspended production at its Indonesian factory, PT Java Pacific, which has an annual production capacity of 30,000 teu. 

Asked if Singamas would follow CIMC to suspend some of its nine factories in China, chief financial officer Sylvia Tam said: “Our factories are still operational for the time being as we still have some orders on handle to complete. However, after we finish our orders on hand, we will also close for the China New Year as done in all these years.” 

Ms Tam added that the demand for dry containers in the third quarter was “still okay” but it had started to slowed down in the fourth quarter, partly due to the fact that this period of the year was the low season for the industry and partly because of the financial turmoil. 

With 58,000 employees, CIMC produced 1.9m teu of dry containers last year. Its operating revenue from dry and other types of containers amounted to Yuan34.1bn ($4.9bn) last year, contributing to 70% of the total operating revenue of the firm. The company did not separate the revenue from its dry container business from its other container businesses. 

In the first nine months this year, CIMC earned net profit of Yuan1.7bn, down 11.7% from the same period last year as operating revenue rose 17.5% in the period. 

CIMC’s major shareholders include Hong Kong-listed port operators China Merchants Holdings International and Cosco Pacific Limited, both holding more than 20% shares in the company