Oslo: Dry bulk shipowners will begin to collapse within the next six months and ''significant'' numbers may fail within two years, according to Fearnley Fonds ASA. Record declines in charter prices for ships to carry coal, ore and grain mean owners won't be able to pay for outstanding orders for new vessels, Rikard Vabo, an Oslo-based analyst at the bank told Bloomberg by phone yesterday. Lower ship values will also push companies' collateral on loans below minimums agreed with banks, he said.
''There are so many ships that will be delivered, we will need another China to cope with all the deliveries by 2010,'' said Vabo at Fearnley, a specialized maritime investment bank.
''We will see a significant number of bankruptcies, that's for sure,'' given rental rates forecast by freight derivatives.
Shipping rates have also been hurt by frozen credit markets and a reduction in banks' willingness to provide the so-called letters of credit that traders use to fund purchases of cargoes.
''With higher-end products such as steel and agricultural commodities you're hearing more evidence of the inability of customers to secure letters of credit from the banks, creating a problem moving those cargoes,'' said Doug Mavrinac, an analyst at Jefferies & Co. in Houston. [24/10/08]
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