Malaysian Shipbuilder Eyes More Barge Contracts From Indonesia

TAS Offshore Bhd, a massive shipbuilder based n Sibu, Sarawak 

Shipbuilder TAS Offshore Bhd is eyeing to secure more shipbuilding contracts for tugboats, especially from Indonesia, moving forward. According to managing director Datuk Lau Nai Hoh, there is strong demand for tugboats in Indonesia as the republic is significantly increasing the export of its coal, buoyed by bullish demand from China.

 

Currently, TAS has 11 tugboats under construction at its shipyard in Sibu, he added.

“Eight of the tugboats are built under contract for both existing and new customers with a total value of about RM55.5mil. “The construction period for these tugboats, depending on their types, varies from 12 months to 20 months,” Lau said. The company also continuously received enquiries related to the construction of the tugboats, which are essential for the transportation of coal, iron ores and other commodities, he said.

 

Lau pointed out that Indonesian coal miners are expected to benefit from the memorandum of understanding (MoU) inked between the Indonesian Coal Mining Association and its counterpart, China Coal Transportation and Distribution Association, in November 2020 to facilitate the export of thermal coal from Indonesia to China. The deal, which is worth US$1.46bil (RM6.10bil), will be valid for three years.

 

The two parties have agreed to enhance their cooperation to boost coal export from Indonesia, which is targeted to reach 200 million tonnes. The bright outlook for the coal mining industry in Indonesia is expected to spur demand for more tugboats, Lau said, adding: “Our group is looking forward to reap further benefits from this latest development.”

 

Based on the latest market research report by Technoavio, he said the tugboat market is projected to grow at a compounded annual growth rate of 14% during 2021-2025.

“Our group is well positioned to benefit from the positive outlook in the tugboat market,” added Lau.

 

He explained further that coal prices in Indonesia have surged to an all-time high, boosted by strong demand from China, which is the world’s biggest coal importer. Therefore, coal producers in Indonesia are looking to maximise revenue by driving up the sales of their coals.

The Ministry of Energy and Mineral Resources of Indonesia has set the thermal coal reference price at US$150.03 (RM627.85) per tonne for September 2021, which was 30% higher compared with US$115.35 (RM482.72) per tonne set in July 2021, well supported by sustained demand from China.

 

In another development, China’s thermal coal futures contract hit an all-time high of 1,376.8 yuan (US$212.92 or RM891.03) per tonne last week. Indonesia, which is the world’s top five coal producer, exported 405.05 million tonnes in 2020. Its coal exports surged to the peak level of 454.5 million tonnes in 2019. This is compared with exports of 286.9 million tonnes in 2017 and 163 million tonnes in 2007, respectively. Indonesia is said to have an estimated coal reserves of 5.5 billion tonnes.

 

Lau said the coal industry in Indonesia has also greatly benefited from the ongoing trade spat between China and Australia. Australia is reported to have an equivalent coal production of 550 million tonnes in 2020. However, Australia’s coal exports to China has taken a hit by the ongoing trade tension and sanctions imposed by the latter.

 

 

In the short to medium term, he said TAS will continue to focus on its shipbuilding business catering to the transportation, port operations and mining industry. “In view of the expected recovery in the global economy, the group is actively prospecting for new clients from new market segments to add to our customer base in efforts to enhance our sales growth,” he added.

 

In April, TAS group delivered five units of garbage collection craft for port contract services worth S$4.5mil (RM13.8mil) to their Singaporean owner.

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