US commodities giant Cargill is being linked with a $250m order for up to half-a-dozen capesize bulkers in China. Industry sources say the order is being placed through an offshore subsidiary called Great Wave Navigation and involves three firm 180,000-dwt newbuildings at Singapore-listed Yangzijiang Shipbuilding for delivery between the last quarter of 2018 and late 2019. The deal includes three options.

Sources suggest Great Wave Navigation is the same offshore company that was set up six years ago in a joint venture between Cargill and a Mitsui group company, understood to be Tokyo trading giant Mitsui & Co.

In May 2013, Cargill was reported to have teamed up with the same Japanese partner and ordered three capesize bulker newbuildings at state-owned Shanghai Waigaoqiao Shipbuilding for delivery in 2015 at a reported price of $47.5m each. Within six months of signing the contract, it sold the trio to Scorpio for $57m each, pocketing a $28.5m profit.

Executives at Yangzijiang decline to comment on talk of the Cargill capesize order, citing confidentiality clauses. However, they confirm that the yard is in serious discussions with several shipowners for all types of vessels.
Cargill also declined to comment about details of the order when contacted by TradeWinds. It is also understood that each of the Yangzijiang newbuildings is priced at $41.5m and will be constructed to the International Maritime Organization Tier II standards.

Observers believe the US-Japanese partnership is again taking advantage of low newbuilding prices to dabble in asset play by ordering the capesizes — and some are not happy about it. “If they do not sell the newbuildings, they could always use them for carrying their own cargoes,” one dry bulk expert suggested. But he added: “This is an unwelcome move to the industry… as it is, there are already too many ships, and with a commodities company like Cargill capitalising on low shipbuilding prices and ordering new tonnage, the recovery of the dry bulk market will take even longer.”

Concern is growing over speculative orders, as Cargill is not alone in making such a move. Other trading companies and investment banks have taken advantage of low newbuilding prices to acquire cheap tonnage. These include Trafigura, JP Morgan and Chinese leasing companies. VesselsValue lists CarVal Investors — the investment arm of Cargill — with a fleet of 17 ships, of which 12 are capesize bulkers built between 2005 and 2012.

On the sale-and-purchase front, CarVal was an active player in 2013 and 2014, acquiring four medium-range products tankers and 13 bulkers. Its most recent acquisition was in March last year, when it bought the Imabari-built, 182,000-dwt Spring Zephyr (built 2010). It sold the 176,400-dwt Portage (built 2002) four months ago to Winning Shipping in Singapore for $8.6m. Cargill, the world’s largest agricultural commodities supplier, logged $2.84bn in net profit in 2016 to 2017, a 19% year-on-year increase.