Cargo hungry coastal Chinese fleet turns trading on the high seas

CHINA's fleet of coastal ships has taken to the high seas to win more trade than traditional sources can supply, another indication that China's economy is slowing.

"It's not a tiny ghost fleet. They can have a massive impact on the international freight market," a senior shipping source told Reuters.

The number of Chinese coastal ships is between 1,500-2,000 with deadweight ranging between 10,000 and 50,000 tonnes. Many of the 20,000-tonners or still smaller ships are unregistered and unclassified anywhere.

"These smaller ships don't get released into the spot market, they're often very old and only fit to hug the coast," said one shipping source.

But bigger Chinese coastal vessels are now working in the Indonesian coal trade. "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 shipping companies.

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, said the report.

"We've seen these Chinese vessels in the market, attacking the Indonesian coal business and undercutting everybody," said an Asia-based shipbroker with RS Platou.

Exports of nickel ore from Indonesia have fallen after it imposed a 20 per cent tax on shipments as part of its strategy to limit exports of raw commodities.