X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Dry bulk rates: What to expect? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 4, 2007

    Dry bulk rates: What to expect?

    Freight rates for Capesize, the largest dry bulk carrier (used to transport coal, iron ore and other dry commodities) continue to scale new highs on firm demand to move cargo across the Pacific. The Baltic Capesize Index, a daily benchmark freight index for Capesize vessels across different routes, has almost doubled in the past one year. Similarly, the Baltic Panamax index and Baltic Supramax Index have advanced by 120% and 91% respectively.

    What were the freight drivers?
    Similar to 2005, the dry-bulk market in 2006 and 2007 has pre-dominantly been driven by robust growth in commodity imports form Asia, particularly China (Chinese demand for iron ore grew by an impressive 19% YoY in 2006). This led to congestion in the loading ports, effectively increasing the utilisation rates. In February-March 2007, Australia's New Castle port, arguably the world's largest coal handling port had about 70 ships waiting for loading. With the congestion significantly delaying the turnaround time of ships and vessels getting held up at the ports, the freight rates in the dry bulk sector have shot up significantly. Reduction in foodgrain in Australia, which meant longer tonne miles from South America and Asia, supported the Handymax and Handysize trades.

    How has it benefited Indian companies?
    Indian shipping companies operate a fleet of 70 dry bulk carriers, the biggest players being Shipping Corporation of India, GE Shipping and Mercator Lines. GE Shipping, which operates 12 dry bulk carriers (1 Capesize, 2 Panamax, 6 Handymax and 3 Handysize), recorded an average TCY (time charter yield) of US$ 28,446 per day for its dry bulk carriers in 1QFY08, compared to an average TCY of US$ 15,487 per day in the previous year, an 84% YoY increase!

    What to expect?
    The demand for dry bulk commodities is expected to grow by 5.5% to 6% on the back of a 4% to 4.5% growth in the global economy (Source: Teekay Shipping). The strength in the dry bulk segment is likely to continue on the back of robust demand for iron ore and coal from Asia. Traditional coal exporters like China, Vietnam and Indonesia are gradually turning into net importers, which will have a positive impact on the tonnne-mile demand too. The US harvest for corn and soyabean, which starts in October, is also expected to keep the dry rates firm. On the supply side, a total of 27 mdwt (million dead weight tones) of capacity is due for delivery in 2007 resulting in a fleet growth of about 7% YoY, which due to strong demand is expected to be absorbed. Hence, overall earnings are expected to remain strong in the medium term.

     

     

    Equitymaster requests your view! Post a comment on "Dry bulk rates: What to expect?". Click here!

      
     

    More Views on News

    G E Shipping: A Bad Quarter (Quarterly Results Update - Detailed)

    May 9, 2017

    GE shipping registered a loss in 4QFY17 due to weak global shipping market and lower crude prices which negatively impacted the offshore segment.

    G E Shipping: Crude, Product, and Offshore Segment Drag Performance (Quarterly Results Update - Detailed)

    Feb 16, 2017

    G E Shipping has reported a 22.8% YoY decline in the topline while the bottomline has declined by 33.4% YoY.

    G E Shipping: Pressure from All Segments Drags Performance (Quarterly Results Update - Detailed)

    Nov 21, 2016

    G E Shipping has reported a 20.2% YoY decline in the topline while the bottomline has declined by 24% YoY.

    Cochin Shipyard Limited (IPO)

    Aug 1, 2017

    Should you subscribe to the IPO of Cochin Shipyard Ltd?

    G E Shipping: Offshore and Dry-Bulk Segment Impacts Performance (Quarterly Results Update - Detailed)

    Aug 22, 2016

    G E Shipping has reported a 15.8% YoY decline in the topline while the bottomline has declined by 24.8% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS