Freight rates likely to rebound in shipping sector: ICICIdirect
Monday, 13 February 2012 | 00:00
ICICI Securities is of the view that the shipping sector is likely to continue its downward trend and is likely to get much worse going ahead. It has provided its outlook on the key rates and utilization of offshore vessels which are as under:
Dry bulk freight rates are expected to rebound after the Chinese industrial sector restarts post the New Year holidays, which would lead to an increase in seaborne trade and increased demand for vessels. Over the longer term, freight rates are expected to remain weak due to high level of Chinese iron ore inventory and significantly high fleet addition over the next two years.
In the near term, tanker freight rates could see a positive momentum owing to escalating tension between European nations and Iran. However, over the longer term, crude oil tanker freight rates are expected to remain subdued owing to the oversupply of tonnage with 11% of present fleet expected to be delivered in 2012, which would handicap the market.
LPG freight rates are expected to continue the positive momentum, particularly for VLGCs, while MGCs freight rates are expected to remain range bound with a positive bias.
Utilisation levels for offshore vessels are expected to improve while charter rates are expected to remain range-bound with a positive bias in January 2012. High capex spend by major global oil exploration/drilling companies is likely to lead to higher utilisation levels for offshore vessels.
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