• Wed
  • Oct 22, 2014
  • Updated: 9:33pm

China Shipping expects pressure on tanker rates

PUBLISHED : Wednesday, 13 August, 2008, 12:00am
UPDATED : Wednesday, 13 August, 2008, 12:00am
 

China Shipping Development, the mainland's largest coastal energy shipping company, said high oil prices and an oversupply of tankers would undermine demand for oil transportation, exerting downward pressure on tanker rates.

The company yesterday reported a 44 per cent rise in net profit for the first half on an increase in freight rates and mainland demand for coal and crude oil.

Net profit rose to 3.18 billion yuan (HK$3.63 billion) from 2.2 billion yuan a year earlier, under Hong Kong accounting standards. Sales rose 60 per cent to 9.3 billion yuan, largely due to an increase in freight rates for coastal coal and international oil transport.

'Inflation will continue to increase in the second half, resulting in a higher risk of a further downturn in the global economy,' the firm said.

Oil transportation rates would be volatile and come under pressure in the second half, the firm said. The outlook for dry bulk would be more positive, hovering at a high level.

The Baltic Dry Index, which reflects the charter rates of dry bulk vessels, rose 62 per cent on average in the first half. Average coastal rates rose 68 per cent year on year.

Sales from dry bulk shipping increased 54.8 per cent to 5.2 billion yuan on 3.4 per cent growth in volume. Domestic coal accounted for 73 per cent of total sales.

The oil transport segment also reported a 24.4 per cent increase in sales, totalling 2.9 billion yuan on an increase in international tanker rates.

The World Scale Index, which reflects the rates of very large crude oil carriers, rose 111 per cent to 149.8 points for the trade lane between the Middle East and Japan.

Bunker fuel costs, which account for 46 per cent of operating costs, increased 41 per cent to 2 billion yuan.

China Shipping shares closed up 4.08 per cent at HK$18.90 yesterday before results were announced.

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