Shares of Indian shipping companies soared on Thursday on continued strength in the Baltic dry index, which tracks rates for ships carrying dry commodities like iron-ore, coal and cement. The Baltic Dry Index, which hit its highest level in 21 months last week, rose another 5.2% on Thursday to touch 2,127 points. In the last one month, the Baltic index has risen 25%.
The country?s largest shipping company, Shipping Corporation of India (SCI) saw its shares jump 11.2% to close at R40.65 on Thursday, while the biggest gain was seen by Bharati Shipyard, whose shares closed up 19.96% at R30.65 on the BSE. Essar Shipping and Mercator gained 14.7% and 10.7% respectively in trade.
SCI?s director? bulk operations, Sunil Thapar, recently told FE that although the recent surge in Baltic rates bodes well for the company, it will take a year until the rates meaningfully help the company?s financial position.
The index?s recent surge has been on higher coal imports by India and the increasing demand for iron-ore in China. India, the world?s third-largest coal consumer, imported 48% higher coal in June than a year ago on increased demand from power stations and steelmakers, according to shipping data. Moreover, China?s demand for iron ore has seen a steady rise since last December. Iron ore accounts for 60-65% of global imports.
?I don?t see the shipping market reaching a point where ship-owners can reap any benefit until 2015. The global economic conditions are not conducive enough for shipping rates to be lifted significantly,? Thapar had said.