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HONG KONG (Reuters) - Shares in China Rongsheng Heavy Industries Group Holdings Ltdtumbled 18 percent on Monday after the U.S. securities regulator accused a company controlled by the shipbuilder"s chairman of insider trading ahead of China"s CNOOC Ltd"sbid for Canadian oil company Nexen Inc.Labourers work at a Rongsheng Heavy Industries shipyard in Nantong, Jiangsu province May 21, 2012. REUTERS/Aly Song

The U.S. Securities and Exchange Commission filed a complaint in a U.S. court on Friday against a company controlled by Rongsheng Chairman Zhang Zhirong, and other traders, accusing them of making more than $13 million from insider trading ahead of CNOOC’s $15.1 billion bid for Nexen.

On Monday, Rongsheng shares dropped as much as 18 percent to HK$1.15, a record low, leaving the company with a market capitalization of just over $1 billion. The company also issued a profit warning, saying first-half earnings would fall sharply as a result of a global shipbuilding downturn, a factor that has already pushed its shares down more than 75 percent in the past year.

Rongsheng - which entered a strategic cooperation agreement with CNOOC in 2010 - said in a Hong Kong filing that it did not expect the U.S. investigation to affect its operations. It said Zhang did not have an executive role in the company.

“The news around the chairman comes on the back of other operational and credibility issues,” Barclays said in a note to clients. “We think China Rongsheng presents significant company-specific risk.”

Zhang was ranked the 22th richest Chinese person by Forbes Magazine in September 2011. But his net worth fell by more than half in the past year to $2.6 billion in March 2012 as shares of Rongsheng tumbled.

RUGAO, China/SINGAPORE (Reuters) - Deserted flats and boarded-up shops in the Yangtze river town of Changqingcun serve as a blunt reminder of the area"s reliance on China Rongsheng Heavy Industries Group, the country"s biggest private shipbuilder.A view of the Rongsheng Heavy Industries shipyard is seen in Nantong, Jiangsu province December 4, 2013. REUTERS/Aly Song

The shipbuilder this week predicted a substantial annual loss, just months after appealing to the government for financial help as it reeled from industry overcapacity and shrinking orders. Rongsheng lost an annual record 572.6 million yuan ($92 million) last year, and lost 1.3 billion yuan in the first half of this year.

While Beijing seems intent to promote a shift away from an investment-heavy model, with companies reliant on government cash injections, some analysts say Rongsheng is too big for China to let fail.

Local media reported in July that Rongsheng had laid off as many as 8,000 workers as demand slowed. Three years ago, the company had about 20,000 staff and contract employees. This week, the shipbuilder said an unspecified number of workers had been made redundant this year.

A purpose-built town near the shipyard’s main gate, with thousands of flats, supermarkets and restaurants, is largely deserted. Nine of every 10 shops are boarded up; the police station and hospital are locked.

“In this area we’re only really selling to workers from the shipyard. If they’re not here who do we sell to?” said one of the few remaining shopkeepers, surnamed Sui, playing a videogame at his work-wear store. “I know people with salaries held back and they can’t pay for things. I can’t continue if things stay the same.”

In the shadow of the shipyard gate, workers told Reuters the facility was still operating but morale was low, activity was slowing with the lack of new orders and some payments to workers had been delayed.

“Without new orders it’s hard to see how operations can continue,” said one worker wearing oil-spattered overalls and a Rongsheng hardhat, adding he was still waiting to be paid for September. He didn’t want to give his name as he feared he could lose his job.

“Morale in the office is quite low, since we don’t know what is the plan,” said a Rongsheng executive, who declined to be named as he is not authorized to speak to the media. “We have been getting orders but can’t seem to get construction loans from banks to build these projects.”

While Rongsheng has won just two orders this year, state-backed rival Shanghai Waigaoqiao Shipbuildinghas secured 50, according to shipbroker data. Singapore-listed Yangzijiang Shipbuildinghas won more than $1 billion in new orders and is moving into offshore jack-up rig construction, noted Jon Windham, head industrials analyst at Barclays in Hong Kong.

Frontline, a shipping company controlled by Norwegian business tycoon John Fredriksen, ordered two oil tankers from Rongsheng in 2010 for delivery earlier this year. It now expects to receive both of them in 2014, Frontline CEO Jens Martin Jensen told Reuters.

Greek shipowner DryShips Inchas also questioned whether other large tankers on order will be delivered. DryShips said Rongsheng is building 43 percent of the Suezmax vessels - tankers up to 200,000 deadweight tons - in the current global order book. That"s equivalent to 23 ships, according to Rongsheng data.

Speaking at a quarterly results briefing last month, DryShips Chief Financial Officer Ziad Nakhleh said Rongsheng was “a yard that, as we stated before, is facing difficulties and, as such, we believe there is a high probability they will not be delivered.” DryShips has four dry cargo vessels on order at the Chinese firm.

Rongsheng declined to comment on the Dryships order, citing client confidentiality. “For other orders on hand, our delivery plan is still ongoing,” a spokesman said.

At least two law firms in Shanghai and Singapore are acting for shipowners seeking compensation from Rongsheng for late or cancelled orders. “I’m now dealing with several cases against Rongsheng,” said Lawrence Chen, senior partner at law firm Wintell & Co in Shanghai.

Billionaire Zhang Zhirong, who founded Rongsheng in 2005 and is the shipyard"s biggest shareholder, last month announced plans to privatize Hong Kong-listed Glorious Property Holdingsin a HK$4.57 billion ($589.45 million) deal - a move analysts said could raise money to plug Rongsheng"s debts.

Meanwhile, Rongsheng’s shipyard woes have already pushed many people away from nearby centers, and others said they would have to go if things don’t pick up. Some said they hoped the local government might step in with financial support.

The Rugao government did not respond to requests for comment on whether it would lend financial or other support to Rongsheng. Annual reports show Rongsheng has received state subsidies in the past three years.

The shipyard, located in the Yangtze River Delta, was founded in 2006, and became the largest private shipbuilder in China, churning out giant valemaxes at its four large dry-docks, before a massive financial collapse forced it to cease operations in 2014.

Broking sources in China tell Splash that the yard’s former chief operating officer David Luan is now preparing to officially reopen the yard, to be known as SPS Shipyard, a reference to ShipParts.com, a business he created in 2015 after quitting Rongsheng.

SPS Shipyard will start to market cape and kamsarmax slots from next week with next available slots being from Q3 2025 onwards. Luan has yet to reply to questions sent by Splash earlier today.

The Langham, a historic hotel in Post Office Square occupies a building whose former life was the Federal Reserve Bank of Boston. Public spaces are opulently endowed with high ceilings, museum worthy oil paintings, intricate marble floors, rich woods, jewel tones, touches like lobby lamps in dark green akin to the old fashioned bank teller ones of yester-year, select antique banking gear, deep sofas and plush chairs. Situated in the heart of the towering Financial District, the Langham is walking distance to the city"s biggest attractions, Think: Faneuil Hall, old State House, the North End, the Seaport and others are all a stone"s throw away. The hotel is well endowed with event and function space and as well, displays artistic endeavours depicting the history of the Banking System by adorning the lobby walls and throughout the hotel"s public spaces. The real gems of The Langham: however, are the rooms and my top floor retreat included creature comforts like a spacious layout, a heavenly bed and a massive mini-bar for my delight. Crisp blues and whites form the colour palette that inspired a cheerful and calming aura accompanied by a sitting area with comfy chairs for relaxing. Built-in millwork graced the quarters with a decorative table for dining or homework and a wood floor panelled the entryway along with a gracious view of the cityscape. The bath was outfitted in massive white marble complete with heated floor, steam shower and double sink. The property"s staff spares no time or effort executing their guest assistance. The Langham"s two on-site dining options are hopping establishments. The FED (how appropriate) is a street-level bar that serves elevated pub-fare, raw bar seafood and inventive cocktails. For something special, ask for the "Vault Sprits" or construct your own seafood tower (as I did) from all the credos and local oysters your heart desires. The cocktails sound groovy and delicious and I frothed at the "Kool & the Gang" concoction which featured gin, raspberry, lime, ginger and a top tab of aquafaba .....pretty cool...I didn"t,t know whether to look at it or drink it....I drank it. The main restaurant, Grana, occupies a spectacular area in the hotel, the former Grand Hall of the Reserve with soaring ceilings, ornate chandeliers and velvet banquettes. The menu is chocked full of American and Italian classics with breakfast items like Panettone French toast, omelettes, Belgian Waffles and fresh baked items. Turning up the food fare a notch for dinner......how about lobster ravioli, beef and pork bolognese, and stew cioppino. I was intrigued by the Spaghetti Pancake brunch item (rock shrimp ragout, toasted garlic, garden herbs)...this was terrific. and of course ...whats a menu without dessert....this one is in the form of cannoli, panna cotta and tiramisu....could be more Italian. So if you are searching for prestigious accommodations, in a location with a historical flavour along Financial lines and rewarding dining v

The world coal and iron ore trade demand depends very much on the biggest purchaser China. Coal import increased to 100 million tons in 2009 and tends to rise upwards until 2020. In 2009, iron ore import demand to China reached 2/3 of the world’s iron ore trade. The second biggest purchaser in the world is India that is looking for new suppliers in Russia and Latin America seeking to fill increased needs. Despite the fact that bulker market shows recovery signals since the end of 2009 the nearest future of shipbuilders focused on bulker carriers is not yet safe. During the first four months of 2010, it contracted 185 new bulk carriers (15 million dwt). Though prices of new building incentives have fallen by 30% the order book for 2010-2014 is overfilled: 3286 new bulkers (43.6% of existing bulker fleet) totalling 287.1 million dwt (59.7%)(CESA AR, 2010). This means that shipyards of China, S. Korea, Japan and new players focused on production of bulkers should turn to the building of other ship types. Consequently, the competition among high added value shipbuilders should be more intense.

Such a danger as “tenth wave” is poising now over the global shipbuilding industry. What shipyards of what countries will survive it? It might be that some countries will decide to reduce shipbuilding capacity or even close it before their shipyards collapse.

Productivity is influenced by technology, facilities, management competence, work organization, work practice, the level of workers’ skills and motivation. The level of the shipyard’s technology is one of the most important factors influencing the cost competitiveness, especially for the large enterprise.

Technology benchmark provided by T. Lamb shows very interesting results forcing to think what is more valuable for the shipyards competing in the market. It compares typical production elements such as steelwork and outfitting production, other pre-erection, ship construction, layout & environment, design & drafting, and organisation/operating of the main shipbuilding countries/regions. The highest overall level has Japan (4.43), the second – S. Korea (4.00), then Europe (3.4), and the lowest is of China (2.88) (Lamb, 2007). Is China a winner just because of low labour price? Or is Chinese labour cost lower because of small investment? Another reason impacting (more specifically – distorting) the competitiveness of shipyards is State support that goes to increasing of the national shipbuilding capacity. For example, over the past decade Korea almost quadrupled its production capacities while Japan and Europe kept stable production volumes. Since 1998 to 2009, S. Korean shipbuilding capacity grew by 10.8 million CGT and Chinese - by 7.9 million CGT (ECORYS SCS, 2009). China and S. Korea continues to follow a highly aggressive expansion path. Under Chinese "Shipbuilding industry adjustment promotion plan" the government has defined provision of operating funds to shipyards and expansion of financial support to owners who order export ships. Not only these countries but also new players such as Brazil, Turkey, India, etc provide huge amounts of support and financial assistance to their domestic producers by using various forms of subsidies including investment aid, loans and payment guarantees to shipbuilders, suppliers, governmental bailouts, subsidies on ship prices for domestic ocean going ships’ buyers, mandatory requirements to order ships at domestic yards and subsidized loans for domestically built ships, direct loans and debt guarantees to ship-owners, etc.

In such conditions, keeping a competitive edge of European shipyards becomes more and more complicate. Despite of the reduced order book Europe chooses quality and excellence over the low costs as the main strategic point of further development of the shipbuilding industry.