Hyundai Merchant Marine (HMM) said April 24 it has cancelled two Newcastlemax dry bulkers it ordered in 2013.

South Korea's second-biggest shipping company explained in a Korea Exchange filing it placed the orders on the basis of securing long-term shipping contracts.

"Since then, it has been determined that the charterer could not obtain any guarantees for the cargo. Due to this, we are cancelling the ship orders," said HMM.

The 206,000dwt ships were ordered at Bohai Shipbuilding Heavy Industry for almost KRW56.5bn (US$53.3m) each on the back of contracts of affreightment with South Korean steel mill Posco. At the time, HMM also cited competitive newbuilding prices as a reason to order the ships, which were due for delivery in January 2017.

The cancellation aside, HMM has been facing a liquidity crunch and is trying to sell its dry bulk business, having sold its LNG shipping business in 2014.

HMM's parent company Hyundai Group has raised more than KRW2 trillion since it announced its plan in 2014 to secure KRW3.3 trillion in a pre-emptive measure to avoid a liquidity crisis. Of the KRW2 trillion, KRW1 trillion from the sale of HMM's LNG shipping division is included.