Shipping scrips rise 50% in 3 months
The scrips of the shipping companies like Shipping Corporation of India, Great Eastern Shipping, Varun Shipping, Essar Shipping and Mercator Lines have seen their prices move up over 50 per cent in the past three months. For the first time in the last five years, the foreign institutional investors have also picked up minority stake in the shipping companies.
This boom has been fuelled by the Indian shipping rates which are an all time high due to tonnage charges hardening in the international market. The demand for ships has also been unprecedented following the huge Chinese demand for raw materials like steel, iron ore and coal and high import volumes of grain and other items by the US and the UK.
The SCI scrip has gone up by 81 per cent to Rs105.70 from a low of Rs 58.35 per cent, while GE Shipping has appreciated by 50 per cent from a low of Rs 52 to close at Rs 81 on Wednesday. Other shipping scrips like Varun Shipping and Essar Shipping have gained 40 and 71 per cent respectively. The Baltic dry index, which is the bench mark for freight rates on vessels carrying bulk goods, including coal, iron ore and grain, have quadrupled in the past year and have jumped 50 per cent in the past three weeks.
The dry bulk earnings of the Capsize vessels have moved up from $30,091 per day as on September 5 2003. to a $43,326 as on October 3, 2003. The earning of the Panamax vessels have gone up to $24,534 per day from $15,943 while the freight rate of Hamax Avg vessels has increased to $16,075 per day from $13,700.
Mr S. S. Rangnekar, director, Shipping Corporation of India said that a record increase in Chinese imports of iron ore and steel were the key reason for the initial jump in the shipping prices. An unexpected rise in coal imports for Europe, Japan and the US this year has also helped to lift prices. “Besides, the huge distance between China and various other countries will also help the shipping lines to increase their profits. The trend in the dry bulk category is likely to continue for a year. In the container segment, the trend will continue till 2005-06.”
A senior official with the GE Shipping said that there has been a change in the trade pattern which is reflected in the higher tonne mile demand. Moreover additions to the dry bulk fleet has been minuscule and this too has triggered a surge in freight rates.
Officials of the Indian National Shipowners’ Association said the recent surge had been sparked by the start of the north American grain exporting season. They said that the dry bulk shipping capacity is likely to rise about 2.5 per cent this year and 3 per cent next year.

Republished from The Asian Age