Shipping cos set sail on Chinese booster

Renewed signs of strength in the Baltic Dry Index (BDI) are drawing investors back to shipping counters once again. Market watchers attributed the rise in the BDI to expectations of a stimulus package for shipbuilders by the Chinese government. Among the prominent gainers, Mercator Lines rose 23%, and Essar Shipping was up close to 8%. Other stocks like GE Shipping, ABG Shipyard, Chowgule Steamships also closed higher in a weak market on Thursday. The Baltic Dry Index climbed 15% on Wednesday and it has been going up from 600 to the current level of around 1,300. The index touched 1,316 on Wednesday, a steep rise from its 22-year low of 663 in December last year. Harish Mittal, CMD of Mercator Lines, expects revival in the demand for raw material. “There is increase in demand for iron ore in China due to pick-up in the steel production,” he said. Furthermore, economy seems to be getting back on track as the banking system is once again witnessing some stability. The global liquidity crunch had made it difficult to obtain letters of credit from the banks,” he said. V Ashok, director & CFO, Essar Shipping Ports & Logistics, added: “Markets are also driven by ore coming out of Australia and fresh coal orders out of Indonesia and Australia. There has been very strong period interest and rates have shot up dramatically. A continued rise in rates can be partially attributed to the lack of available tonnage in the Pacific basin.”