The Icelandic Steamship Company (Eimskip) has decided to cancel a container vessel ordered at Chinese shipbuilder Rongsheng Shenfei.

The vessel forms part of a contract signed in 2011 that entails construction of two 875teu container vessels.

The first vessel, Lagarfoss, was delivered in June last year and has served the company well, according to Eimskip.

However, the shipping company decided to scrap the second unit as there have been construction delays which are likely to resume.

"The construction of the second vessel has not proceeded according to schedule and it is evident that further delay is ahead. The company has now decided to exercise its right under the abovementioned agreement and cancel the second vessel," Eimskip explained.

The second ship was planned to be delivered in the fourth quarter this year at the latest.

Eimskip added it would seek refund of US$13.1m (plus interest) which the company has already paid in relation to the construction of the second vessel. The refund sought plus interest is secured by a bank guarantee.