(Yicai Global) March 11 -- COSCO Shipping Specialized Carriers, which is a subsidiary of the world's third-largest shipping company China Ocean Shipping Group -- better known as COSCO -- will build eight cargo ships for around USD288 million to expand its pulp carrier fleet and meet Chinese papermakers' rising demand for pulp imports.

The Guangzhou-based firm's shares [SHA:600428] were up 4.39 percent to CNY3.57 (51 US cents) in the afternoon on the news.

The global paper making and pulp industry will continue to grow in future, with North and South America as major producers and Asia as the main consumer, COSCO Shipping Specialized Carriers projects, adding it is optimistic about the pulp ocean shipping market because China is the world's largest consumer of the paper raw material and relies heavily on imports.

Each of the new freighters is a 62,000-ton multifunctional pulp transport ship, and affiliate COSCO Shipping Heavy Industry Dalian Which will build the vessels is expected to deliver them between October next year and the end of 2022, COSCO Shipping Specialized Carriers said in a statement yesterday.

The company will pay in yuan for four of the craft and in US dollars for The others, which will be flagged in Hong Kong.

The company's pulp transport fleet will expand from 12 to 20 ships after the new vessels go into operation, and this will consolidate its leading position in the market and enable it to perform contracts of affreightment it has inked with the world's major pulp producers and take advantage of the market opportunity rising from plummeting shipbuilding costs.

A contract of affreightment is a binding agreement in which a vessel owner provides cargo-space at a set time and place for a designated freight to a seller liable for payment whether the cargo is ready to ship or not.

Editor: Ben Armour