For updates visit
Shipping stocks soar as bulk freight rates firm up
Thursday, April 26, 2007
Stocks of Indian shipping companies continued to chart an upward course on the bourses this month, as global freight rates in the dry bulk segment further firmed up. Industry analysts say the increased movement of bulk cargoes and the congestion at Australia's Newcastle port, the world's biggest coal handing port, are the cardinal factors that are shoring up bulk freight rates.
The freights are expected to continue their upward march, especially as there are no signs of the Newcastle congestion immediately dissipating.
Indian shipping companies operate a fleet of 70 dry bulk carriers, the biggest players being Shipping Corporation of India, Great Eastern shipping and Mercator Lines. Bulk cargoes include coking coal, steam coal, grain and iron ore.
While the stock of Shipping Corporation of India moved up 13.73 per cent on Wednesday to close at Rs 209.55 on the BSE, the stocks of other shipping companies have been consistently rising month on month. The stocks of Mercator Lines Ltd and Great Eastern Shipping Company Ltd gained 23.45 per cent and 22.80 per cent respectively, while the stock of Varun Shipping Company Ltd rose 18.25 per cent.
Analysts attribute this rise in stock prices to rising freight rates. "The dry bulk rates have been showing an upward trend for a while now. Even the wet bulk freight rates have started rising again after falling earlier," said Ms Surbhi Chawla, shipping analyst, Angel Broking. "Since SCI are the biggest player, they will stand to be the biggest gainer," she added.
Capex plans
Shipping companies also have a lot of scope for capacity addition.
"All Indian ships carry 13 per cent of Indian cargo. Therefore, there is a lot of scope for adding capacity. All companies have plans to add more ships in the near future," said Mr Vikram Suryavanshi, shipping analyst, Karvy Securities.
As a matter of fact, the bulk freight rates have been on an upward movement for the last few months, accentuated by the congestion at Newcastle port. Reports indicate that at the moment a total of 75 ships are waiting for berths at the Australian port, with the waiting period stretching up to 30 days. Almost 12 per cent of the world's Capesize vessels are blocked in the Newcastle queue, leading to a global shortage in supply of vessels, which is pushing up the freight rates.
The shortage in availability of vessels is prompting charterers to fix a time charter ranging from six months to as much as five years, amid fears that they may not get ships in the spot market.
An indication of the surge in freight rates can be had from the fact that the one-year average time charter rate for a Capesize and Panamax vessel so far in 2007 were $69,300 per day and $34,000 per day as against the average rate of $45,200 per day and $22,100 per day in the whole of 2006 respectively.
The Baltic Dry Bulk index moved up from an average of 4408 in February this year to 5120 in March and touched a high of 5782 on April 19.
Analysts say that the increased movement of bulk cargoes is also pushing up freight rates. The total quantity of dry bulk cargoes being hauled all across the globe has increased from 2,538 million tonnes in 2004 to 2,792 million tonnes in 2006— it is expected to touch 2,900 million tonnes by the end of 2007.
The freights are expected to continue their upward march, especially as there are no signs of the Newcastle congestion immediately dissipating.
Indian shipping companies operate a fleet of 70 dry bulk carriers, the biggest players being Shipping Corporation of India, Great Eastern shipping and Mercator Lines. Bulk cargoes include coking coal, steam coal, grain and iron ore.
While the stock of Shipping Corporation of India moved up 13.73 per cent on Wednesday to close at Rs 209.55 on the BSE, the stocks of other shipping companies have been consistently rising month on month. The stocks of Mercator Lines Ltd and Great Eastern Shipping Company Ltd gained 23.45 per cent and 22.80 per cent respectively, while the stock of Varun Shipping Company Ltd rose 18.25 per cent.
Analysts attribute this rise in stock prices to rising freight rates. "The dry bulk rates have been showing an upward trend for a while now. Even the wet bulk freight rates have started rising again after falling earlier," said Ms Surbhi Chawla, shipping analyst, Angel Broking. "Since SCI are the biggest player, they will stand to be the biggest gainer," she added.
Capex plans
Shipping companies also have a lot of scope for capacity addition.
"All Indian ships carry 13 per cent of Indian cargo. Therefore, there is a lot of scope for adding capacity. All companies have plans to add more ships in the near future," said Mr Vikram Suryavanshi, shipping analyst, Karvy Securities.
As a matter of fact, the bulk freight rates have been on an upward movement for the last few months, accentuated by the congestion at Newcastle port. Reports indicate that at the moment a total of 75 ships are waiting for berths at the Australian port, with the waiting period stretching up to 30 days. Almost 12 per cent of the world's Capesize vessels are blocked in the Newcastle queue, leading to a global shortage in supply of vessels, which is pushing up the freight rates.
The shortage in availability of vessels is prompting charterers to fix a time charter ranging from six months to as much as five years, amid fears that they may not get ships in the spot market.
An indication of the surge in freight rates can be had from the fact that the one-year average time charter rate for a Capesize and Panamax vessel so far in 2007 were $69,300 per day and $34,000 per day as against the average rate of $45,200 per day and $22,100 per day in the whole of 2006 respectively.
The Baltic Dry Bulk index moved up from an average of 4408 in February this year to 5120 in March and touched a high of 5782 on April 19.
Analysts say that the increased movement of bulk cargoes is also pushing up freight rates. The total quantity of dry bulk cargoes being hauled all across the globe has increased from 2,538 million tonnes in 2004 to 2,792 million tonnes in 2006— it is expected to touch 2,900 million tonnes by the end of 2007.
0 comments:
Subscribe to:
Post Comments (Atom)
IMPORTANT DISCLAIMER
Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
