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Knightsbridge loses $6.2m in Q3 as recovery slips again

Tanker owner Knightsbridge has reported a $6.2m loss as the dry bulk market remained depressed for another quarter.

Despite widespread anticipation of a market recovery in the second half of 2014, fleet utilisation was down and average income on a time charter equivalent basis was halved from $21,000 per day in Q3 2013 to $10,200 per day in the last quarter.

Coal led the demand slump in the third quarter, with China's imports of met coal falling 35% compared to Q3 2013. Iron ore demand and supply has been strong, but tax moves aimed at reducing the attractiveness of coal imports have had a severe impact on the dry bulk shipping sector.

In October a merger of the fleets of Knightsbridge and Golden Ocean Group was announced, a move that will create one of the world's largest dry bulk shipping companies. The deal is to be put to general meetings at both companies in the first quarter 2015.

"After completion of the merger the combined company will be in a position to look for further consolidation opportunities in the dry bulk market," the company said in its outlook statement.

"The spot market has improved in the fourth quarter relative to the third quarter, however long term coverage has not been offered at attractive earnings so far. As a consequence a vast majority of the fleet remains exposed to spot earnings. The combined company will consider taking cover for a part of the fleet when the market improves and such charters offer an attractive return on the investment."

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