Shipping container plant in Guangdong province to cost $1.13 billion to build

China International Marine Containers (Group) Co will build a new container production base in Guangdong costing 7 billion yuan ($1.13 billion), the company said in a statement to the Hong Kong stock exchange.

CIMC, the world's largest container manufacturer by market share, is betting that a recovery in the global shipping market will boost demand for containers.

The statement said that wholly owned subsidiary CIMC Container Holdings has reached an investment agree ment with the Fenggang county government of Dongguan city, Guangdong province for the CIMC Fenggang logistics equipment manufacturing project.

CIMC Container will initially invest 2.5 billion yuan to acquire land and build infrastructure facilities, which are due to be completed by the end of next year.

The remaining funds will mainly be spent on the construction of plants, the purchase of fixed assets, market promotion, and product research and development.

Annual production capacity will reach 750,000 standard containers (calculated as 20-foot equivalent units).

CIMC's revenue rose 1.2 percent to 41.19 billion yuan between January and September in 2013. But its container business was affected by a declining global shipping market, with revenue falling 22 percent to 16.71 billion yuan.

Han Yichao, an analyst with Changjiang Securities Co, said CIMC has been waiting for opportunities to increase container sales and develop higher value-added container products.

Those could include bulk containers made of advanced materials, cement tanks and environmental containers.

More than 40 companies and 18 manufacturing bases carry out container production, sales and design work for CIMC throughout the world.

The Chinese company produces a wide variety of containers, ranging from dry freight containers to refrigerated and special boxes, for domestic and global clients.

It also offers logistics vehicles , tanker trailers and construction vehicles, and it designs and produces passenger boarding bridges and cargo-handling systems for airports.

Even though the world economy continued to face a number of uncertainties last year, the global container shipping market achieved stable growth, especially on the Europe -South Asia, Asia-Africa and Asia-Middle East routes, according to a report by the Shanghai International Shipping Institute released in February.

"Emerging economies today are contributing more wealth to the world economy. Their demand for consumer goods has never been stronger," Han said. "This also indicates there will be a rise in demand for more container ships to deliver the goods."

Bao Zhangjing, director of the China Shipbuilding Industry Research Center, said since AP Moller - Maersk Group deployed its first Triple-E vessel, the world's largest container carrier, on the Asia-Eu rope route last July, Chinese competito rs such as China Shipping Container Lines Co and China COSCO Holdings Co have ordered large container vessels from domestic and South Korean shipbuilders.

"From a long-term perspective, large container ships are more likely to dominate the global shipping business, because super-sized containerships mean lower freight rates and more business opportunities," Bao said.