SINGAPORE, Nov 17 (Reuters) - A second major Chinese shipping firm has halted payments to foreign ship owners because of the downturn in the freight market, further straining China's relationship within the global maritime community and sending shipping shares lower.
Grand China Logistics, a unit of HNA Group, has withheld payment for months to Norwegian dry bulk firm Golden Ocean without any clear explanation, sending shares in the sector down on fears the global economic slowdown is already impacting earnings.
"It's not just us. It's a number of others which are not being paid and this has been going on for some time," said Anders Zorn, the head of Golden Ocean's Singapore office.
Shares of Golden Ocean tumbled 6 percent on the Oslo bourse on Thursday while rival D/S Norden was down over 3 percent and Torm fell over 5 percent.
Golden Ocean Chief Executive Herman Billung played down the issue, saying its exposure was minimal as it had just one ship chartered to the Chinese firm.
Analyst Erik Nikolai Stavseth at Arctic Securities said shares had sold off because there was a risk that Golden Ocean would be forced to place its vessel on the spot market where prices are depressed.
The Financial Times reported that Greece's family-owned Vafias Group, Norwegian firm Spar Shipping and Athens-based Minerva Marine were also having difficulty securing payments from Grand China.
Spar Shipping declined to comment.
The dispute reignites industry concerns over the stability of contracts with Chinese maritime firms, after COSCO Holdings' earlier this year halted payments to ship owners to renegotiate better terms.
A Grand China Logistics official said it was common for businesses to delay payments in a difficult market.
"It's normal that businesses owe each other money from time to time," said the company official who declined to be identified.
"During tough times like this, shipowners are facing a tough market and much pressure on cash flow, so they are more pressured to get payments in time."
HUGE EXPANSION
China's shipping sector -- led by COSCO and Grand China -- has become one of the world's most influential with its fleet more than doubling over the last decade, matching the country's appetite for commodities and raw materials.
The global economic slowdown, however, has led to an oversupply of vessels and low freight rates, forcing Chinese shipping companies to take audacious action to support their businesses.
"This is completely unusual," Zorn said. "Several companies, not necessarily only Chinese as there have been others, have used the world economic situation to hold back or to try and walk away from contracts."
He said Grand China had failed to pay Golden Ocean for its dry bulk vessels, which can transport everything from iron and coal to grains and fertilizer.
Zorn declined to say how much was in dispute or what measures Golden Ocean may take against Grand China if the situation was not resolved soon.