Mitsui O.S.K. Lines Ltd plans to boost its annual Chinese trade by more than 50 percent to 200 billion yen ($1.83 billion) within the next five years, the world's top ship liner said on Wednesday.
Akimitsu Ashida, president of the Japanese company, told a news conference it had already signed contracts with Chinese steel producers, such as Baosteel and Maanshan Iron and Steel Co, to transport iron ore.
It also hoped to win business in Chinese exports of automobiles, which Mitsui expected to start in 2006 or 2007, he said. Its current annual China trade was about 130 billion yen.
In March, Mitsui announced an investment of 1.16 trillion yen to build 243 ships in the next six years to cash in on booming transport demand from China and other parts of Asia.
One of the largest expansions in its 120-year history follows planned capacity increases by rivals and sharp increases in world freight rates due to bottlenecks at global shipyards and voracious demand for raw materials to fuel Chinese economy.
"China will export automobiles abroad. We have to engage in the transportation of automobiles," he said. "That is coming from 2007, possibly in 2006."
Chinese annual car production would reach 10 million units by 2010, up from 4.4 million, he said. Japan produces 10 million units and exports about 4 million.
Its joint venture with Chinese freight forwarder Sinotrans Ltd, set up in March, would begin shipping automobiles within China in September, he added.
The venture was already bringing crude oil from the Middle East to China in a very large crude carrier, he added.
Of the total 243 vessels being built, Ashida said, 126 vessels had been contracted before the recent 25-30 percent jump in shipbuilding costs.
They are scheduled to be completed within three years.
Its contract with Baosteel included using the world's biggest iron ore carrier with capacity of 320,000 tonnes, which had yet to be constructed, he said.
Industry sources have long said a sharp increase in Chinese iron ore imports was driving up freight rates, which reached historic highs in February, before Beijing slammed on the economic brakes to prevent overheating in April.
Chinese 2004 iron ore imports are heading towards 200 million tonnes, up from 148 million last year, despite a slowdown from the second quarter.
Asked if part of the new ships were replacement for those to be retired, Ashida said: "Fifty percent can be replacement. If the market is good ... all can be additions."
Mitsui OSK currently operates a fleet of about 630 vessels, including 26-27 very large crude carriers, 43 LNG carriers, 70 cape-size vessels and 30 Panamax-sized vessels.
He said while only about 30 percent was non-Japanese trade at present, the ratio should increase to 50 percent in future.
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