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UPDATES AND ARTICLES
     
  17th November 2008 - STAR MARITIME
 

Gloomy prospects for shipping rates

MISC Bhd’s chemical and container shipping rates are also facing a gloomy outlook as rates weaken due to slower demand and greater supply.

According to a local bank-backed research house, this would impact MISC, which has 13 chemical tankers.

An analyst with the research house said the slowdown in global crude oil demand would reduce refinery runs and petrochemical output, directly affecting cargo availability for the chemical tanker trades.

Meanwhile, the weaker consumer demand for vegetable oils and excess vessel supply from high newbuilding deliveries will also have a negative impact on rates, the analyst said.

“As a result, we expect MISC’s chemical tanker earnings to remain weak this year and next year.

“However, the division should not go into losses because two-thirds of the capacity is tied-up contract of affreightment (COA) that is naturally on a long-term basis and falling bunker prices will reduce voyage costs,” said the report.

Its container shipping division is also facing a bleak outlook as freight rates continue to fall, especially in the Asia- Europe trade route, due to lower demand as a result of the global economic crisis.

“As a member of the Grand Alliance, MISC deploys most of its capacity on routes between Asia and Europe, which have seen per box year-on-year rates fall by 75% to 80%,” the research house pointed out.

   
 

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