BANGALORE May 31 Global shipping companies
transporting power-generating coal will likely ride an increase
in import from largest consumer China, following the country's
decision to hike electricity tariffs for the first time in
nearly two years.
China said on Monday it would raise tariffs for some users
by about 3 percent, as it tackles its worst power shortage in
seven years -- partly the result of little incentive to produce
"If the higher electricity prices and improved margins for
utilities lead to incremental thermal coal imports that would
likely be positive for the dry bulk market," analyst Frode
Mørkedal at Oslo-based investment bank RS Platou Markets said.
Morningstar Inc analyst Adam Fleck said companies such as
Genco Shipping and Excel Maritime would
particularly benefit because of their higher spot-market
exposure as well as bigger fleet of Capesize vessels, which ship
coal and iron ore.
Shippers like Diana Shipping , Eagle Bulk Shipping
and Navios Maritime Holding are also likely to
"Demand picture for the next quarter or two is definitely
positive," Fleck said.
He reckons that Wall Street analysts could raise their
estimates on the companies because of a slightly healthier
demand environment for a sector saddled with oversupply of
Availability of power in China could also boost the
production of steel in the country, which in turn could spur the
import of iron ore -- the biggest dry bulk commodities
transported by ship owners.
The Baltic Exchange's main sea freight index , which
tracks rates to ship dry commodities, has more than halved in
the past six months. The index was up 0.41 percent on Tuesday.
Genco shares were up 6 percent at $7.78 in afternoon trade,
while those of Excel Maritime also rose 6 percent on the New
York Stock Exchange. Stocks of other dry bulk shipping companies
also edged higher.
(Reporting by Krishna N Das in Bangalore; Additional reporting
by Vaishnavi Bala; Editing by Sriraj Kalluvila)