• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Port Info

• Ships in Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• The Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Jayanta Mallick

Kolkata , March 23

ARE the valuations of shipping stocks floating on a sea of confusion? It appears so, going by Wednesday's price and volume figures on major bourses. All the stocks in the sector closed the day slightly lower with substantial volumes.

According to dealers, there are strong crosscurrents of demand and supply in the shipping counters. "A great deal of churning is being witnessed, indicating contradictory value perceptions," said a NSE broker. GE Shipping and SCI, both leaders of the pack, saw intra-day fluctuations between the red and the green zones.

At the root of the seeming confusion is the perception that China is slowing down its commodity intake. But the spot rates for both tankers and dry bulk have gone up over the last 10 days.

According to industry insiders, tanker rates went up substantially in the period between March 11 and March 18. For example, the per day rate for a VLCC shot up to $60,485 from $37,442.

"Considering that the top two domestic shipping companies have significant number of assets placed for spot market, it appears a fresh valuation opportunity," observed a fund manager.

Although rates have come off their peaks, the indications are they are again on the upward mode, a senior official of a top shipping player added.

In case of dry bulk, some experts like Mr Nicolai Hansteen, Chief Economist at Oslo-based shipbroker Lorentzen & Stemoco, feel rates for ships carrying iron ore and coal may slump in the coming quarter.

A recent Morgan Stanley report also apprehends a combination of a slowdown in demand and pick-up in supply (of vessels) to cause rates to drop during 2005-06. Rates, while off 20 to 50 per cent from the highs in the November 2004, are still significantly above the long-term averages. But Morgan Stanley predicted that supply would exceed demand during 2005 itself.

Industry insiders and commodity analysts, however, feel that the domestic demand for ships carrying crude oil, coal and iron ore has not shown any shine of flagging yet. "The speculation over the US and Chinese demands have not impacted the forward freight rates also," said a shipping analyst.

A section of market players is also betting on the expansion/acquisition plans of both GE Shipping and SCI. "The possibility of very high dividend is also at play in case of SCI," Mr Devarsh Vakil of Anagram Stockbroking said.

"For Essar shipping, sale of a part of its crude fleet is proving to be positive for short-term valuation post part-repayment to secured creditors, the cash per share from the realisation from sale of vessels (due for delivery in April 1, 2005) is pegged at Rs 25," he added. However, sale of tankers would significantly impact the operational earnings for Essar in 2005-'06, he felt. The stock closed 5 per cent lower at Rs 36 with a volume of 10.33 lakh shares on the BSE.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Stock market: Barometer of economy?

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line