Bulk fleet boost for Singapore arm of Mercator Lines

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Singapore: Mercator Lines (Singapore) said it will lift its fleet size by a quarter to 15 by 2010 and sees increased coal demand from India giving a boost to dry bulk shipping, writes Reuters. Dry bulk shipping is still likely to see lower freight rates, after the sector has been hammered by the global slowdown, but it is unlikely to deteriorate much further as it has sunk to a very low base, the CEO of the Indian-owned firm told the newswire.
"Contract renewal is not a concern at all. We know ships will get employed very easily because we're already seeing the demand, but it's not going to be at the same price as earlier," CEO Shalabh Mittal said in an interview, pointing out the firm currently has almost 100 percent utilisation of its fleet.
The firm, a unit of Mercator Lines, currently operates a fleet of 12 dry bulk vessels, 10 owned and two chartered. It is buying one of the latter and has also chartered another three vessels, taking its fleet size to 15 by next year.
A triple whammy of weak consumer demand, ship oversupply and the re-stocking of iron ore inventories at Chinese ports in the past 3-4 weeks have kept shipping rates under pressure, but Mittal sees an increase in coal demand from India in the next year.
"Indian coal demand has been very stable this year. Overall expectations are that imports of coal will go up," Mittal said.
"The difference in the Indian coal story is that most of the coal imports in India are for the power sector, which is not affected by the current downturn at all," he added.
The company, which ships mostly coal and iron ore between Indonesia, China and India, reported a 45 percent rise in full year 2008/2009 net profit, mainly on an increase in vessel day rates and operating days in the first half of its year.
Its customers include India's ArcelorMittal and Tata Power, as well as trader Glencore.
Last month it won a $175m contract with Brazil's Vale, the world's biggest iron ore producer, to transport iron ore from Brazil to China over the next 14 years.  [21/05/09]