A disagreement between a Taiwanese shipping company and BHP Billiton Ltd. over charter rates could lead TMT Co. into converting four very large ore carriers into LNG tankers, according to Bloomberg.

TMT has four ore carriers under construction at Hyundai Heavy Industries Co. The company had already expressed its intention to move into the LNG shipping business.

Bloomberg reported that commodity-carrying rates have plummeted by 90% over the past five years due to overcapacity and slowing demand in China. TMT believes it needs a fixed minimum for its rates to attract bank financing.

Whether or not Hyundai could convert the ore vessels to LNG tankers remains to be seen. Depending on how far along the construction is, the cost of conversion may be prohibitive. The threat to convert the ships could also be a negotiating ploy.

However, such a conversion might lead to more such conversions as demand for LNG shipping capacity increases.

TMT told Bloomberg that it has separately signed an initial agreement with IHI Corp. for construction of LNG vessels, although the company did not provide details.  The company also indicated it had reach an agreement with Sao Tome and Principe for floating LNG facilities