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Amit Mitra
Virendra Verma

Mumbai , Oct. 7

WITH the global freight market continuing to firm up since the second half of last fiscal, stocks of the shipping companies have been on a bull run on the bourses since April this year. With most of the shipping companies, including the State-owned Shipping Corporation of India (SCI), Great Eastern Shipping, the largest fleet owner in the private sector, Essar Shipping and Mercator Lines, reporting handsome increases in their net profits in the current fiscal, stocks of these companies have mirrored an upswing.

Among the shipping stocks that have provided the best returns is Mercator Lines, which returned over 600 per cent since April. The stock price of the company has increased from Rs 22.35 on April 1 to today's closing price of Rs 166, a gain of 643 per cent.

The SCI stock has gained 175 per cent from Rs 51.25 to Rs 140.85; Essar Shipping increased by 235 per cent from Rs 5.05 to Rs 16.95; GE Shipping jumped 129 per cent from Rs 37.80 to Rs 86.60 and Varun Shipping gained from Rs 9.20 to Rs 14.71, a rise of 60 per cent.

Analysts say that the bull run may continue, as the outlook for the freight market, both in the dry bulk and tanker segments, appears to be bright in the coming months.

The dry bulk freight rates, which started to register an upward trend in the beginning of last fiscal, actually gathered momentum in the second half of the year, leading to improved earnings for bulk carrier operators. For example, a cape size bulk carrier, which earned an average of $10,878 a day in the first half of the year, could increase its earnings to $20,511 per day in the second half. Similarly, the average earnings for suezmax tankers, which declined by 23 per cent in the first half of last fiscal from $19,711 per day to $15,186 per day, recovered significantly by an increase of 153 per cent from $15,465 per day to $39,252 per day in the second half of the year.

Shipping analysts feel that the immediate prospects for both the tanker and dry bulk market appear to be bright.

Dry bulk carrier demand, which recorded a growth of 2.3 per cent in 2002, is expected to grow by 3.7 per cent in 2003.

Similarly, in the tanker segment, significant increase in oil and oil products has been projected from countries such as China and Japan in the wake of a pick-up in their industrial production and a cut back in their nuclear power generation.

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