The Hindu Business Line : Mercator to foray into chemicals shipment

The chemical tankers, being built in a Korean shipyard, are expected to join the company's fleet in 2008 and 2009. While two of the tankers will be of 19,500 DWT capacity, the third one will be slightly smaller at 11,500 DWT.

Mumbai , Sept. 24

Mercator Lines, which is primarily into shipping of oil all across the globe, will be expanding its business horizon by foraying into the chemical transportation segment.

The company, through its recently launched Singapore subsidiary, Mercator Lines Singapore, will be acquiring three chemical tankers at a total cost of $ 65 million, sources told Business Line. The chemical tankers, being built in a Korean shipyard, are expected to join the company's fleet in 2008 and 2009. While two of the tankers will be of 19,500 DWT capacity, the third one will be slightly smaller at 11,500 DWT.

Last year, the company forayed into dry bulk operations and more recently launched another subsidiary, Mercator Offshore Ltd, marking its entry into the offshore segment.

When contacted, Mr H.K. Mittal, Mercator's Chairman, did not wish to speak on the company's foray into chemical transportation, stating that, "we are always on the lookout for profitable ventures in the shipping business."

He admitted that the company has set aside funds for buying new ships, but the market currently was starved of vessel availability. "There are simply no ships, even in the second-hand market, for sale and the few that we came across carried huge price tags. We are on the lookout for new assets," he said, adding that LNG ships and container vessels were not on the company's buying list at the moment.

Buy option

The company's Singapore subsidiary, which operates the nine geared-Panamax vessels that it had taken on charter with a buy option from Klaveness, will be exercising the option to buy the first of these ships next month. "We think it is the right time to exercise the buy option. The vessel will be Singapore-flagged," he said.

Mercator is betting big on the offshore segment, with its offshore subsidiary having placed an order for a premium jack-up rig at a cost of Rs 810 crore. "We expect to have the rig by March 2009, but we will finalise the contract for its deployment within the next few months. The market is so buoyant that contracts for rigs are being signed in advance. At prevailing rates, the rig can earn anything between $ 2,00,000 and $ 2,30,000 per day," Mr Mittal said.

Need for replacement

According to him, 80 per cent of the world rig fleet is more than 20 years old and hence there is a need for replacement, with only five per cent of the units being built only after 2000. There are about 450 rigs in operation world-wide and 32 in India. The demand for rigs in India is expected to grow to 55, including 45 jack-up rigs, within a year or so, he pointed out.

On freight market trends, Mr Mittal said the dry bulk market had significantly firmed up during the last few weeks due to increase in demand for transportation of raw materials. "I do not think we should see any market correction till February 2007," he felt.

The Baltic Capesize Index rose by 36 points in the second week of September to touch 5681, while the Baltic Panamax Index climbed up 100 points to reach 4210.

More Stories on : Diversification | Shipping | Chemicals

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