The Hindu Business Line : Shipping stocks remain firm despite banning of chartering of vessels

Kolkata, May 12 Shipping stock hardly got impacted by the Director-General of Shipping’s recent order banning chartering of vessels of more 25-year vintage. Apart from Shipping Corporation, largest of the pack, and Srinivasa Shipping, one of small listed companies, others did not react negatively to the circular.

According to industry sources, Indian sea transporters may be exempted from the preview of the proposed directive. “In any case, various Ministries such as oil and steel are likely to oppose the move as it may not be feasible to implement on cost concerns in the immediate term. The DG has said that for the east coast, which more prone to accidents, the order would be effective from this month to November, while for the west coast, the ban would be effective from June to August end,” an industry insider said.

“If it is effective on foreign flags, which in the recent past met with accidents near Indian shores, then there would not arise the question of an impact on the Indian shipping stocks,” said an analyst with an institutional brokerage.

However, she mentioned that rising crude oil prices was likely to have an impact on the revenues of the shipping companies as chartering of ships were becoming subject of cost-control mechanism by the day. More and more oil players were trying to economise on the score, she added.

Similarly, the Government measures to control steel exports also has an impact on the demand for sea transport. “Rates have not yet softened, but if the oil prices continues to soar more tightening of belt may follow and likely to have an adverse effect on the rates in the medium-term,” the analyst said.

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