Upbeat Precious charting fleet upgrade
SET-listed Precious Shipping Plc (PSL), Thailand’s leading dry bulk carrier, is revitalising its fleet and securing more longterm contracts as part of its 2015 strategy to tap into growing demand as the global economic outlook is brighter.
“The seasonality of imports-exports plays an i mportant role i n shipping demand, but there was an absence of any seasonality in 2014,” said Khalid Hashim, Precious managing director.
He said negative factors ranging from currency devaluation in Argentina and Brazil to an outbreak of bird flu led China to cancel 2 million tonnes of soybeans, while an Indonesian ban on exports of unprocessed minerals such as bauxite and nickel have taken shipments off the market.
Mr Hashim said last year the Baltic Dry Index (BDI) averaged 1,105 points, the sixth-lowest average in history.
The BDI assesses the price of major commodities such as coal, iron and grain based on shipping demand against the supply of dry-bulk carriers.
“When freight rates increase, Precious will secure more long-term contracts. But we have not set a specific target. We plan to outperform the index rate,” he said.
Mr Hashim said the average index rates, per ship/per day, for the first two months of 2015 were US$6,800 for Supramax and $5,300 for Handysize.
This year Precious is due to receive 17 new vessels, with seven more next year, raising the total to 48 to meet rising demand.
He said the average lifespan of the ships is 3.5 years, down from older fleets that had a lifespan of 10.2 years. The younger ships are more energy-efficient, making their freight prices more competitive.
Precious reported revenue of 4.66 billion baht in 2014, down from 4.86 billion in 2013. It posted a loss of 80 million baht, down from a profit of 527 million the year before.
Mr Hashim said the loss was because of one-off extraordinary income and the effect of the lack of seasonality.
Shipping should rebound this year as the European Central Bank recently kicked off its quantitative easing plan, which could help drive exports globally, he said.
Malaysia and Australia should export more unprocessed minerals, offsetting the drop in demand from the Indonesian ban, said Mr Hashim.
“Brazil will try to outperform its shipments last year, especially for iron ore. We expect Brazil to ramp up its exports soon, which should raise freight demand, leading to a rebound in the second half of the year,” he said.
PSL shares closed Tuesday on the SET at 16.90 baht, down 30 satang, in trade worth 141 million baht.