Low freight rates, high fuel costs hit shipper
Source: Bloomberg News |
August 22, 2012, Wednesday
|
Print Edition
Print Edition
CHINA Shipping Development Co, part of the nation's second largest sea-cargo group, posted its first half-year loss since at least 1998 because of slumping freight rates and high fuel costs.
The loss of 495 million yuan (US$78 million) compared with a net income of 684 million yuan a year earlier, the Shanghai-based firm said in a stock exchange filing yesterday. First-half sales fell 9 percent to 5.7 billion yuan.
The company, which sails dry-bulk vessels and oil tankers, also forecast a loss for the nine months through September 30 as ship operators struggle with fuel prices that have risen 51 percent in two years. Dry-bulk rates have also fallen 73 percent in the period, based on the Baltic Dry Index, as capacity growth outpaces demand for iron ore and coal shipments.
The drop in rates mean loss-making steel mills may seek to renegotiate existing contracts with shipping firm, CCB International Securities Ltd analysts Winnie Guo and Tim Bacchus wrote in a report dated last Thursday. The shipper gets 15 percent of sales from long-term deals with state-owned mills, they said.
The shipper, a unit of China Shipping Group Co, dropped 2.3 percent to HK$3.35 (43 US cents) at the close in Hong Kong trading. The stock has declined 31 percent this year, versus a 9 percent gain for the Hang Seng Index.
The company plans to almost double its fleet to more than 20 million tons by 2015, it said in an August 8 statement. It didn't say how it would achieve this.
The price of 380 Centistoke Bunker Fuel, used by ships, averaged US$695.58 per ton in the first half in Singapore trading, data compiled by Bloomberg News showed.
The loss of 495 million yuan (US$78 million) compared with a net income of 684 million yuan a year earlier, the Shanghai-based firm said in a stock exchange filing yesterday. First-half sales fell 9 percent to 5.7 billion yuan.
The company, which sails dry-bulk vessels and oil tankers, also forecast a loss for the nine months through September 30 as ship operators struggle with fuel prices that have risen 51 percent in two years. Dry-bulk rates have also fallen 73 percent in the period, based on the Baltic Dry Index, as capacity growth outpaces demand for iron ore and coal shipments.
The drop in rates mean loss-making steel mills may seek to renegotiate existing contracts with shipping firm, CCB International Securities Ltd analysts Winnie Guo and Tim Bacchus wrote in a report dated last Thursday. The shipper gets 15 percent of sales from long-term deals with state-owned mills, they said.
The shipper, a unit of China Shipping Group Co, dropped 2.3 percent to HK$3.35 (43 US cents) at the close in Hong Kong trading. The stock has declined 31 percent this year, versus a 9 percent gain for the Hang Seng Index.
The company plans to almost double its fleet to more than 20 million tons by 2015, it said in an August 8 statement. It didn't say how it would achieve this.
The price of 380 Centistoke Bunker Fuel, used by ships, averaged US$695.58 per ton in the first half in Singapore trading, data compiled by Bloomberg News showed.
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