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Published on August 22, 2007

The shipping and related-industries group has confirmed that global bulk demand and supply will continue to tighten into next year. Combined with a shortage of vessels resulting from worldwide port congestion, the spot freight rate should remain high, or at least at the level it has held so far in the company's fiscal 2007.

The broker said Thoresen's strategy was to keep most of its fleet capacity open to the spot freight rate in 2007-08, in order to take advantage of the healthy rate. The company's fiscal years end in September. As of Monday, Thoresen Thai Agencies had fixed just 32.5 per cent of its fleet into long-term contracts for this year and 17.7 per cent for next year.

With the Baltic Dry Index rising 13 per cent so far in the present quarter, the company will likely record the results of the soaring freight rate in the fourth quarter of its fiscal 2007.

The performance of the company's offshore business, involving sub-sea vessels and tender rigs, is expected to ease in its fiscal fourth quarter after a slowdown in its tender-rig unit. However, the broker does not expect this to have any material effect on Thoresen Thai Agencies' earnings, because the tender-rig segment has previously contributed only 3 per cent of the company's overall revenues. The company's sub-sea-vessel unit, which contributes 8 per cent of Thoresen Thai Agencies' earnings, is expected to operate normally and will help to offset part of the earnings drop from its tender-rig unit.