China which used to be the golden spot for shipbuilders such as SRX Group has now become a complete graveyard. The low intake of commodities at China has also damaged the company’s plan to sell off their shipping lines; thus washing off a total of $435 million of wealth of combined investors of this Korean based three primary companies within this week. This situation has also threatened the company’s possibility of repaying the debts of $1.2 billion of debts within the end of this year of 2013.
The crisis of STX started after the boom in the last decade that resulted in the set up of shipbuilding complex at offshore locations such as Dalian which is situated towards the northeastern part of China by the group. After the slowdown of the Asia’s largest economic structure, added with the crisis of England taking a bigger plunge in the cargo rates made the situation of STX quite critical. It was reported from China Cosco Holdings Co, the largest mover and packers of bulk containers and products that in the previous week they have witnessed a loss for 2012 which is the third loss in one annual year.
China was the promising golden land which STX saw as their opportunity to make better expansion and grow bigger, says Park Moo Hyun who is an analyst at the E*Trade Securities Korea based at Seoul. He adds that though the company had big expectation, it turned out to be a complete nightmare with big investments reverting back to hurt them.
Last year, STX had owned almost $23 billion of assets which they tried to enhance and increase to 2.5 trillion through the sales of asset. In this week, it will be understood whether creditors are accepting their request for voluntary debt deferment of this shipbuilding organization. It is revealed that the organization currently has 1.37 trillion of bonds due for this year.
It is observed that since there was attack of credit crisis, the demand and orders for new ships and vessels have dropped immensely. In the previous year, the order data shows a drop of $87 billion in comparison to the $174.7 billion order rate in the year of 2008, as stated by Clarkson Plc, the largest shipbroker organization in the world.
The other organization of China Cosco also reported a fall which is much higher than the expected loss of 9.6 billion yuan or $1.5 billion in the previous year due to dry rates. Currently it is speculated that the company is planning to sell off its logistic units in order to raise approximately 27 billion yuan with the sales and patent process, reveals two people who are associated with this matter but is not willing to get identified.