Precious boosted by Chinese steel demand
Precious Shipping, a leader in small-handy marine cargo services, expects its average time charter rate will be about 15 per cent higher than last year's US$11,387 (Bt393,534) per day per vessel, due mainly to huge growth in demand from Chinese steel importers.
According to a Bloomberg report, China's steel imports for this year are expected to increase to between 375 million and 400 million tonnes, up by 50 million to 70 million tonnes from last year. "Our average time charter rate in the second quarter will be higher than that in the first quarter because the world's time charter rate tends to increase on the back of shipping demand," the company's managing director Khalid Moinuddin Hashim said yesterday. Precious Shipping's average time charter rate could increase further this quarter because 16 per cent of vessel days still to be contracted will rely on spot rates and their time charter rate will increase if the global rate rises, he added. He said that 84 per cent of its total vessel days was already committed to long-term deals at an average rate of $12,088. "However, if the world's time charter rate declines, our overall rate will not be hurt much because we have long-term fixed price contracts," he said. The company has maintained an average time charter rate of between $11,000 and $13,000 per day per vessel, and it is highly possible that this year's rate will be at the high end of the range. Last year's average rate was $11,387. The company is thinking of purchasing used vessels to replace nine that have been sold, he said. Such used vessels will have to be less than 10 years old and about 28,000 tonnes in weight. Moreover, their price will have to be less than the current market level of $32 million to $34 million per vessel. Precious Shipping plans to spend about $700 million to acquire the vessels. "We must wait for the right time to buy vessels, as the situation in the shipping industry changes every day and we have to consider our cash flow. If the time charter rate falls in the second half of this year, selling prices will also decline. If used-vessel prices slump to a range of $25 million to $30 million, it will be our opportunity to buy," the MD added. Changes in accounting policy required by stock authorities will not have any impact on the company's earnings, because it holds 100-per-cent stakes in its subsidiaries and the parent company always realises dividends from its subsidiaries.
Chalida Ekvitthayavechnukul The Nation
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