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SHIPPING SECTOR UPDATE
Highlights ( in July 2011)
q Shipping markets globally continue to go through a bad phase\
q The dry bulk market is persistently facing problem of oversupply of ships
pegged at 10 to 12% per annum (Gross supply of 616 mn tonnes in the
next 3 to 4 years) and that is putting the various Baltic Indices and
freight rates under pressure. The month of July 2011 saw Baltic Indices
falling by 5 to 10% on a low base. China which is the main driver of the
dry bulk market is currently having huge inventory pile of iron ore of
~100 mn tonnes which is at all time high. Even the iron ore production is
at all time high at ~100 mn tonnes per month. Also the country has
slowed steel production of late. We estimate the country not to be very
active in the market in the near term and hence we expect dry bulk market
to remain subdued in near term.
q The oversupply of vessel is a serious concern even in the crude tanker
market. Activity has slowed down in all the key segments of tanker primarily
due to sluggish world economy and the debt crisis in Europe.
Charters are withholding cargoes in anticipation of better freight rates.
This is negatively impacting the market with number of ships exceeding
the number of cargoes.
q Even the container market is estimated to remain flattish in near term
with huge supply of ships entering the container market.
q Overall we are cautious on the shipping business
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SHIPPING SECTOR UPDATE
Highlights ( in July 2011)
q Shipping markets globally continue to go through a bad phase\
q The dry bulk market is persistently facing problem of oversupply of ships
pegged at 10 to 12% per annum (Gross supply of 616 mn tonnes in the
next 3 to 4 years) and that is putting the various Baltic Indices and
freight rates under pressure. The month of July 2011 saw Baltic Indices
falling by 5 to 10% on a low base. China which is the main driver of the
dry bulk market is currently having huge inventory pile of iron ore of
~100 mn tonnes which is at all time high. Even the iron ore production is
at all time high at ~100 mn tonnes per month. Also the country has
slowed steel production of late. We estimate the country not to be very
active in the market in the near term and hence we expect dry bulk market
to remain subdued in near term.
q The oversupply of vessel is a serious concern even in the crude tanker
market. Activity has slowed down in all the key segments of tanker primarily
due to sluggish world economy and the debt crisis in Europe.
Charters are withholding cargoes in anticipation of better freight rates.
This is negatively impacting the market with number of ships exceeding
the number of cargoes.
q Even the container market is estimated to remain flattish in near term
with huge supply of ships entering the container market.
q Overall we are cautious on the shipping business
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