Reuters quoted a source close to the Greece-based firm said China Shagang Shipping has failed to pay millions of dollars in vessel rental fees to Diana Shipping, as Chinese maritime companies struggle through a downturn in the dry bulk freight market.

Shagang Shipping is the latest in a growing list of Chinese maritime firms that have unilaterally delayed payments to foreign shipowners in the past year, actions that have soiled China reputation with the international maritime community.

The source said the shipping unit of Chinese steelmaker Jiangsu Shagang Group has for months delayed payments for the use of a large iron ore carrier owned by Diana Shipping accumulating more than USD 3 million in outstanding debt.

The Greece-based source who asked not to be identified because he was not authorized to speak to the media said "The problem with delayed payments goes back more than a year but this is the longest period without payment."

He said "It is very important to do business with people and companies that are in a good financial condition and have a good reputation. In this case, this has been a bad experience."

A senior Shagang Shipping official said the company does owe Diana Shipping money but not as much as USD 3 million. He said Shagang intends to pay but needs extra time to obtain financing.

He added that "We are already starting to pay step by step but we need time to get money from our lender. He also said Capesize vessel operators are facing huge losses and they need time to get money, but this company is not giving us any breathing space."

(Sourced from Reuters)