Nip­pon Yusen to triple In­dia cape­size fleet on de­mand for coal

The Pak Banker - - Company& -

TOKYO: Nip­pon Yusen K.K., Ja­pan's sec­ond-largest op­er­a­tor of dry-bulk ships, plans to more than triple its fleet of cape­sizes serv­ing In­dia be­cause of de­mand for coal and iron ore in the world's fastest­grow­ing ma­jor steel mar­ket.

The ship­ping line ex­pects to have 15 cape­sizes haul­ing the com­modi­ties to In­dia by 2015, close to the fleet size cur­rently serv­ing China, Kazuo Oga­sawara, gen­eral man­ager of its bulker group, said in an in­ter­view in Tokyo. The com­pany plans to ex­pand its to­tal cape­size fleet to 120 from 95 by 2012-2013.

In­dian im­ports of coal may surge nearly seven-fold to 200 mil­lion met­ric tons a year by 2015 as the grow­ing econ­omy drives de­mand for metal and elec­tric­ity, Oga­sawara said. The nation's steel con­sump­tion may also jump 14 per­cent next year, com­pared with a 3.5 per­cent in­crease in China and a de­cline in Ja­pan, ac­cord­ing the World Steel As­so­ci­a­tion.

"Crude steel out­put in In­dia is set to sur­pass the level of Ja­pan," Oga­sawara said in a Dec. 21 in­ter­view. "In ad­di­tion, elec­tric­ity de­mand is com­ing in." The ship­ping line is in talks with In­dian steel­mak­ers on long-term con­tracts, Oga­sawara said, with­out elab­o­rat­ing. It cur­rently runs four ves­sels for In­dian cus­tomers Tata Steel Ltd. and Tata Power Co.

In­dia will likely use 68 mil­lion tons of steel next year, com­pared with 599 mil­lion tons in China, the world's largest steel con­sumer, and 62 mil­lion tons in Ja­pan, ac­cord­ing to an Oct. 4 es­ti­mate by the World Steel As­so­ci­a­tion.

Nip­pon Yusen will watch the mar­ket and the tim­ing of port projects be­fore de­cid­ing whether to place any new or­ders for ships, Oga­sawara said. In­dia needs to triple port ca­pac­ity by 2020, Ship­ping Min­is­ter G.K. Vasan said at a con­fer­ence in New Delhi on Dec. 22.

Next year, about 200 cape­size bulk­ers will be de­liv­ered glob­ally, and ca­pac­ity may out­pace de­mand, Oga­sawara said. Rates to hire cape­sizes that mostly haul iron ore and coal have dived 43 per­cent this year to $21,219 a day, ac­cord­ing to the Baltic Ex­change in London.

Fleet ex­pan­sion has driven rents lower even as de­mand in­creased. Seaborne trade in coal and iron ore to make steel and gen­er­ate power will rise 10 per­cent this year, ac­cord­ing to London-based Clark­son Plc, the world's biggest ship­bro­ker. At the same time cape­size-fleet ca­pac­ity will grow 23 per­cent.

Nip­pon Yusen, also Ja­pan's largest ship­ping line by sales, fell 1.4 per­cent to 364 yen as of the 11 a.m. trad­ing break in Tokyo. The stock has gained 28 per­cent this year.

In­dia, the third-largest ironore ex­porter, may also be­come a net im­porter, as do­mes­tic com­pa­nies in­vest in over­seas mines to se­cure ad­e­quate sup­plies, Oga­sawara said. NMDC Ltd., In­dia's biggest iron-ore pro­ducer, plans to buy a mine in Aus­tralia, its first over­seas ac­qui­si­tion.

In­dia's Coal Min­is­ter Sriprakash Jaiswal also said this week that state-run com­pa­nies will seek to buy mines in South Africa, Botswana and Mozam­bique to plug a do­mes­tic short­fall. He is due to visit Africa next month.

Coal In­dia Ltd., the world's biggest pro­ducer of the fuel, and Neyveli Lig­nite Corp. are among state-owned com­pa­nies look­ing for de­posits over­seas. Jaiswal said lo­cal sup­ply may fall short of de­mand by 83 mil­lion met­ric tons in the year end­ing March 31.

Nip­pon Yusen said Oct. 29 it ex­pects a profit of 76 bil­lion yen ($907 mil­lion) for the year end­ing March 31, com­pared with a pre­vi­ous fore­cast of 68 bil­lion yen, fol­low­ing a re­bound in de­mand for con­tainer ship­ments to the U.S. and Europe. -Bloomberg

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