“The dry bulk shipping industry is continuing its path to recovery,” Mumbai-based Mercator Lines said.
It highlighted that the Baltic Dry Index (BDI) had reached 2,277 points at the end of 2013 from 896 points on 1 April 2013, while the market rate of panamax vessels rose by approximately 57% over the same period.
“On account of increase in freight rates even the asset values increased by around 30-35% during the said period. All these factors indicate signs of long impending recovery in the dry bulk shipping industry,” it commented.
Industry research reports have predicted growth rate in demand for tonnage to surpass the supply in 2014 with the world seaborne dry bulk trade expected to grow at 8% as against the fleet growth of 6%.
“This year would be first year in last three years when demand would exceed the supply of vessels. China continues to remain the strongest demand driver for all major dry bulks,” Mercator Lines said.
However, continuing ordering of vessels without considering the demand growth may again dampen the freight rates when these new vessels come to the sea, it warned.
Mercator Lines managed to significantly narrow its losses in the third quarter ended 31 December 2013 and revenue built up.
During the quarter, Mercator Lines posted a loss of $3.28m compared to a loss of $72.8m in the same period of the previous financial year. The major contributor to the reduced deficit the absence of provisions for chartered in vessels and loss on disposal of vessel, which recorded about $53m in the previous corresponding quarter.
Revenue was recorded at $23.18m, up 29% year-on-year due primarily to increase in spot rates.
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