Thai bulker operator sees low fleet growth and healthy demand expansion this year and next.
Having flipped into the black in the first quarter, the company is unfazed by threats of looming trade wars, according to managing director Khalid Hashim
04 May 2018

NEWS
Max Tingyao Lin
@MaxL_lloydslist tingyao.lin@informa.com

20180507-02

Trade tariffs may actually benefit tonne-mile demand by extending shipping distance, says company

PRECIOUS SHIPPING MANAGING DIRECTOR KHALID HASHIM HAS STRONG FAITH IN MARKET RECOVERY.

PRECIOUS Shipping has forecast healthy supply-demand fundamentals in dry bulk shipping for 2018-2019, unfazed by threats from a looming trade war between China and the US.

Having flipped into the black in the first quarter, the Thai bulker operator said weak fleet growth and decent demand expansion would continue to support market fundamentals.
“We remain reasonably confident that net growth in tonnage supply will not exceed 2% this year. This should result in another favourable gap of about 200 basis points between growth in tonne-mile demand and growth in tonnage supply,” managing director Khalid Hashim said in a quarterly update.

“We expect a similar favourable demand-supply gap outcome for 2019.”

Mr Hashim said “this happy state of affairs” helped his company post a net profit of $3.4m in the first quarter, compared with a net loss of $1.7m in the same period of last year.

The Precious fleet recorded daily earnings of $10,965 per ship, up from the year-ago level of $8,588, with rising earnings of its handysize, surpamax and ultramax vessels.
Total revenues reached Baht1.1bn ($34.5m) in the three months, up 3.3% on year.

While the world’s two largest economies are establishing trade barriers against each other and threatening more, Mr Hashim said tariffs might actually benefit shipowners.
“In general, trade tariffs simply shift the origination of cargoes and make the shipping journey all the more inefficient, resulting in greater tonne-miles sailed,” Mr Hashim said
“This is always beneficial for dry bulk shipping so long as the trade tariffs do not actually curb or extinguish demand.”

Scrapping could pick up from the “very disappointing level” of 1.7m dwt in the first quarter, as owners will send more ships aged 15 or above to junkyards before the International Maritime Organization regulations on bunker fuel and ballast water treatments take effect in 2019-2020, Mr Hashim added.