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Our Bureau

Kolkata, Aug. 19 Shipping stocks are currently going through a drifting phase, as rates remain off peak.

With the Olympics now under way, and the relatively less active summer season in full swing, the overall demand and rates reflected a flat trend. Dry Baltic rates have recovered in the last four days after 23 days of downward correction, Mr Ajay Jaiswal of Microsec, pointed out. This is because of activity in iron ore and coking coal in the eastern sea routes.

Indian shipping companies, with their assets predominantly tilted toward tankers, which are on long-term contracts, generally witness a very little revenue volatility. Even the dry bulk carriers (Mercator having largest tonnage in this segment) have also protected themselves from the vagaries of rate fluctuations through long-term charters.

The spot rate trends, however, indicate the mark up during the renewal of contracts, according to industry sources According to Anagram Securities: “Tanker rates are expected to firm up on back of increasing movement of crude and limited availability of tankers. Along with lower level of inventory as compared to CY07 and compliance to IMO guideline of phasing out all the single bull vessels by FY10 has added to increase vessel demand. Rates would also be impacted positively on account of scrapping of old tankers with more than 20 years of age. Around 40 per cent of the tankers, representing 14 per cent of total tonnage, are above this age. Additions are likely to take place over the next three to four years. Therefore, we expect demand for tankers to be high of the FY09”.

It felt that in case of dry bulk, ample vessel supply/oversupply would lead to downward pressure on freight rates in the near future. The local clients, exporters and importers, dictate the rates in this space.

Shipping Corporation stock on Tuesday lost over three per cent. In the last one week it has shed 6.5 per cent. Great Eastern Shipping eased by 0.79 per cent on Tuesday. Its one-week loss is 2.56 per cent. Mercator Lines finished up around one per cent, but its weekly loss was 6.32 per cent.

Interestingly all the shipping stocks were in the green in terms of one-month valuations.

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