Hit at home, China's ghost fleet sails high seas
By Jacqueline Cowhig and Alison Leung
LONDON/HONG KONG (Reuters) - China's huge fleet of coastal ships, usually confined to plying the Chinese seaboard, has sailed out of the shadows to seek international business in yet another sign that China's economy is slowing.
The fleet, previously unnoticed by the global market, is suffering from a slowdown in China's coastal trade amid weaker domestic demand from utilities and steel mills and a growing glut in Chinese coal and iron ore stockpiles.
The vessels are now being forced to seek new business such as in the Indonesian coal trade, dealing a further blow to the depressed global dry bulk shipping market.
"There are many more ships lying idle at Chinese ports now - the environment for making money is not so good," said a source at one of the big five coastal shippers, who asked not to be identified.
The slowdown of the Chinese economy has been among the main worries for global markets in general and commodities markets in particular.
China, the world's biggest coal producer, is also the biggest single coal and iron ore importer and freight user and a small change in its buying or freight use sends ripples around the world markets.
China's coastal trade existed for decades on a small scale, but began to boom when power generation needs in the country's south took off due to mass industrialization and coal was urgently needed from the northern mines.
China's coastal coal trade soared by 88 percent from 2006 to move 639 million metric tons (704 million tons) in 2011, according to securities group Jefferies. Shipbroker Clarksons estimates China's coastal trade of coal, steel, grains and fertilizers at over 1 billion metric tons. Continued...