China Shipping to buy two oil tankers

Bulk shipping operator China Shipping Development is continuing its shopping spree aimed at cashing in on the mainland's soaring oil transportation market.

The Shanghai-based company - the mainland's largest carrier of crude oil - announced that it is splashing out 87 million dollars on another two oil tankers to boost capacity.

"The construction and ownership of tankers will enable the company to take advantage of the business opportunities in the shipping market, enjoy economies of scale and optimize its overall route arrangements," it said in a statement to the Hong Kong stock exchange.

The new tankers, each with a capacity of 46,000 DWT, are due for delivery between the fourth quarter of 2007 and the first quarter of 2009.

Upon delivery, the shipping operator will control a fleet of 71 oil tankers with a combined carrying capacity of 3.5 million DWT.

The purchase of the two new vessels will be financed by bank borrowings, increasing the company's gearing ratio.

China Shipping said it is optimistic about demand in the oil transportation market and expects growth in the coming years. In a recent research report, Goldman Sachs said the shipping firm could potentially enter into an attractive new business such as transporting liquefied natural gas.

Earlier this month, the company placed orders for four Very Large Iron Ore Carriers.

For the six months to June 30, China Shipping reported net profit of 1.3 billion yuan (1.307 billion Hong Kong dollars), or 0.39 yuan per share, down 19.4 percent from the previous year.