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Friday, June 12, 2009

PSL: Shipping Rates Set to Top 5,000 Points

Friday, 12 June 2009

Shipping rates are expected to cross the 5,000-point mark later this year despite a recent retreat, says Precious Shipping Plc (PSL), citing current congestion at vessel discharge ports and the continued rise of iron-ore imports into China. The Baltic Dry Index (BDI), the most closely watched measure for commodity shipping rates, slipped 4.27 percent on Monday for the third consecutive day of declines to 3,646. The index, which reached 12,000 last year before plunging below 1,000, had peaked at 4,291 a week before.
PSL managing director Khalid Hashim said the index had eased because imports of iron ore into China had slowed from a previous sharp and sudden pace, but were likely to soon bounce back.
"Considering the congestion at Chinese discharge ports and the present increased level of iron ore imports, the index could actually breach the 5,000- point mark," he said.
The congestion should clear up once this binge buying iron ore abates or more Cape-sized vessels are delivered than market demand can absorb, he acknowledged. "If traffic reduces and demand for iron ore imports into China slows down, then rates will fall as sharply as they have gone up."
Analysts said the BDI dropped after China's stock of iron ore of 70 million tonnes exceeded demand of steel, expected to slide 5 percent this year.
Based on the forecast of the World Steel Association, 64 million tonnes of iron ore would be required by the mainland this year, compared with 68 million tonnes used in 2008.
Mr Hashim also said PSL aimed to sell another 11 ships in 12-18 months after selling 14 of its fleet of 44 ships at the start of this year. Eleven ships have been physically handed over to buyers.
KGI Securities has revised down its net profit estimate for PSL by 13 percent to 2.85 billion baht on the targeted fleet of 32 ships, with the recommended price of 19.4 baht per share.
PSL, the country's second largest dry bulk carrier after Thoresen Thai Agencies (TTA), posted total revenue of 2 billion baht in the first quarter with a net profit of 843 million, down from 1 billion baht a year earlier.
PSL shares closed yesterday on the Stock Exchange of Thailand at 17.10 baht, up 30 satang, in trade worth 68.26 million baht. TTA rose 80 satang to 22.90 in trade worth 1.85 billion baht.

Source: American Chronicle