Shippers say China, India can offset U.S., Europe woes

BANGALORE Thu Aug 11, 2011 11:31pm IST

A stacker prepares to stack a container at Thar Dry Port in Sanand in the western Indian state of Gujarat January 3, 2011. REUTERS/Amit Dave/Files

A stacker prepares to stack a container at Thar Dry Port in Sanand in the western Indian state of Gujarat January 3, 2011.

Credit: Reuters/Amit Dave/Files

Related Topics

A statue of Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi Festival

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

BANGALORE (Reuters) - Business from China and India is robust enough for shippers such as Paragon Shipping, Box Ships Inc and Seanergy Maritime Holdings not to be losing sleep over financial crises in the United States and Europe, executives said.

Brokers, including Intermodal and Wells Fargo Securities, have said the market volatility sparked by Standard & Poor's U.S. sovereign debt rating cut and Europe's debt crisis, could trip the global economy into a double-dip recession and land a body-blow to dry bulk trade and the shipping sector generally.

Aristides Pittas, CEO at Euroseas, said the market turmoil could slow growth in global and U.S. Gross Domestic Product.

"This is something we will continue to monitor closely as dry bulk and container trades closely follow GDP developments," he said on a conference call.

The Baltic Exchange's main sea-freight index, which tracks rates to ship dry commodities such as coal and iron ore, has declined BY nearly a third this year as growth in demand to ship commodities has lagged the increase in vessel supply.

Companies do not expect much short-term impact on the dry bulk market.

"The dry bulk market is not affected by what we see today ... the instability in the United States and Europe," said Michael Bodouroglou, founder and CEO of Paragon Shipping, a dry bulk shipper valued at $76 million.

"This is because the dry bulk market is primarily driven by the emerging economies ... China, India and others."

China's exports hit a record in July and the world's No.2 economy's imports of raw materials such as copper and iron ore saw strong gains. The recent fall in global commodity prices is expected to result in more Chinese buying.

Bodouroglou, who also heads container shipper Box Ships, said the dry bulk market would remain challenging for the next couple of years. The business of transporting containers, however, looks much healthier.

"We're looking at buying container ships because we believe this sector is in a different point in the cycle," he told Reuters by telephone from Greece. "The order book is much healthier and demand is being driven by Asian economies."

SCARCE FUNDS?

Growing overcapacity in world shipping is setting the market on course for a fresh crisis over the next two years, and weaker operators will fail, the head of ship financier DVB Bank told Reuters.

Seanergy Maritime CEO Dale Ploughman said the market uncertainty could make it tougher for companies to access funds.

"The dry bulk sector is not the flavour of the day and banks have their own problems and will be very picky on who they're prepared to support," he told Reuters.

Bodouroglou warned that some companies may default on loans, although he added he did not see any liquidity issue at his companies.

"There are companies which have breached covenants, and they may breach covenants," he said.

(Reporting by Krishna N Das and Vaishnavi Bala in BANGALORE; Additional reporting by by Alexander Huebner in FRANKFURT and Jonathan Saul in LONDON, Editing by Ian Geoghegan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Market Outlook

Market Outlook

Indian shares headed for correction, but outlook strong - BofA Merrill.  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage