Shipping stocks significantly outperformed the overall market (NIFTY) on back of sustained recovery in Baltic Dry bulk index (BDI) during the month of April 2010. Baltic Drybulk Index (BDI) increased by 11.8% from 3,000 at start of month to 3,35 at the end of month mainly due to an increased for coal recovery in steel sector. The incremental demand for thermal coal from power plants to meet summer demand and lower electricity generation from Hydropower particularly from China droved the freight rates for Capsize.
The improved sentiment due to recovery in freight rates helped shipping stocks to outperform in range bound market. NIFY moved in range from low of 5,200 to high of 5,373 and closed with modest gain of 0.5% to 5,278. The Great Eastern Shipping (GESHIP) scrip reported an increase of 11.8% to Rs 329 in a month outperforming the overall market as well as other shipping stocks. The news of listing of Greatship India a wholly owned subsidiary of GESHIP helped the stock to outperform on expectation of rerating and value unlocking of its offshore business. The stock prices of Shipping Corporation of India (SCI) and Mercator lines (MLL) increased by 6% to Rs 165 and 5.9% to Rs 60 respectively during the month. The volatility in stock price of GESHIP remained high for with wide swing of 14.3% in stock prices form low of Rs 295 at start of month to high of 337 on 29 April 2010. The stock price of MLL and SCI moved in narrow range with sustained gain and showed swing of ~6.2% during the month. The stock price of Varun shipping reported an increase of 3.6% to Rs 51 during the month.
The Great Eastern Shipping delivered its 1996 built Suezmax crude carrier (147,800 dwt) to the buyers during the month. The company signed a contract to sell a single hull 1985 built (27,400 dwt) General Purpose product carrier. The vessel will be delivered to the buyers in Q1FY2011. GESHIP also sold a Platform/ROV Support Vessel from its Singapore incorporated subsidiary Greatship Global Offshore Services, immediately after taking delivery of from Colombo Dockyard PLC, Sri Lanka. To benefit from the fall in asset prices and better employment for larger vessel whose built cost are relatively low compared to potential income, GE shipping modified its order for the construction of two Suezmax crude carriers of approx 158,170 dwt each with Hyundai Heavy Industries, (HHI) South Korea given in July 2008. The both parties have mutually decided to modify the contract and build three Very Large Crude Carriers (VLCCs) of 318,000 dwt each instead of the two Suezmaxes. These vessels are expected to be delivered between January and April 2012. There was no change in fleet of MLL, SCI and Varun Shipping during the month of April 2010. (Our Shipping Analyst) |
