| Code: 112147 |

TIN news:  The four-fold rise in the global index for dry bulk freight shipping, the Baltic Dry Index (BDI), is a missed opportunity for domestic shipping companies. The BDI stood at 1,162 on Wednesday, from a record low of 290 in February. Scrapping of several dry bulk vessels across the globe is given as a reason behind the index’s rise, still a conscious decision to use indigenously mined coal and low iron ore export from India is keeping domestic shipping firms away amid this rally.
“The government is encouraging use of indigenous coal. Coal import business has come down by 25-30 per cent in the past year. India was among the top exporters of iron ore at one point with more than 50 million tonnes (mt) export a year. Today, we have a cap of 20 mt only. This change in the bulk trade structure has put the shipping sector into depression,” said Kiran Kamat, Managing Director, Link Shipping & Management.
According to the Indian Ports Association, the country’s major ports during April-October (first seven months of this financial year) imported 56 mt of thermal coal, which is six per cent less from the same period last year. Import of coking coal was less by one per cent in this period. Iron ore traffic in April-October by major ports stood at 20 mt.
Alongside, the Baltic Dirty Tanker index (for crude oil) and Baltic Clean Tanker index (for petroleum), saving grace for shipping companies last year, show an adverse trend. “Falling oil prices triggered increased trade in crude and refined petroleum. Vessels were also being used for storage. Due to this, tanker indices had moved up last year. This year, however, there is surplus storage and a fall in these indices,” said Hitesh Avchaat, Analyst, CARE Ratings.
According to banking officials, Shipping Corporation of India, Great Eastern Shipping, Essar Shipping, Apeejay Shipping and Varun Shipping had a tough business climate for some time. Though stress in this sector is not new, falling freight rates could make debt servicing more difficult for these companies.
“Companies were able to service debt comfortably for a few years, backed by contracts which gave good income. Now, in the downturn, freight rates are weak and since repayment obligations remain, some companies are finding it tough,” said an official at a government-owned bank.

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