Asian Bulk Carriers to Improve
Precious Shipping is the second Asian bulk carrier to report a narrowing of losses as its earnings were lifted by an improving market, increasing daily vessel rates and the disposal of older ships that cut operating expenses.
According to MANA, The Bangkok-based shipping company posted a second quarter loss of USD150,000 compared to a USD13.48 million loss for the same period in 2016.
It’s results follow those of Hong Kong-listed Pacific Basin Shipping that reported first half net losses narrowing to USD12 million compared with a loss of USD49.8 million for the year before. This was attributed to improved market freight rates compared with the historic lows of a year earlier, while at the same time demand was outpacing supply.
Precious Shipping’s net vessel operating income for the first half of 2017 increased by around 32% compared to the same period of 2016.
However, Precious Shipping Managing Director Khalid Hashim pointed to a Banchero Costa report that said market conditions may have improved compared to the lows of 2016, but that the slowdown in demolition activity and continued large deliveries could cap substantial rate increases this year.
Scrapping in the dry bulk fleet in the first six months is now 50% behind that of the same period last year, but the analysts expect scrapping levels to increase in the second half as market rates come down.
Berglund expects the shrinking orderbook to have a positive impact on dry bulk shipping in the long term, but says that more time, scrapping, and limited ordering are required for a more normal market balance to be sustained.
However, a factor that could influence the scrapping decisions of shipowners is the International Maritime Organisation (IMO) agreeing to delay enforcement of the Ballast Water Management Convention (BWMC) compliance for existing vessels from September 2017 to September 2019.
Ship brokerage Charles R. Weber said compliance for existing vessels called for the fitting of Ballast Water Treatment systems from their first International Oil Pollution Prevention (IOPP) renewal survey after the enforcement date.