Indian shipping companies are looking for discount buying in international shipyards, which have seen a spate of order cancellations on account of credit crunch and freight rate correction.
The Baltic Dry Index, the benchmark for freight rates for bulk carriers, touched an all-time high of 11,039 on November 13, 2007, up from 2,438 on January 3 in the previous year.
This was the period when lots of speculative buyers booked orders with international shipyards. According to an analyst’s estimate, about 45 per cent of the orders booked in the shipyards currently are for dry bulk carriers.
With the credit crunch in the market, big companies with good credit ratings are finding the effective interest cost higher by 100 to 150 basis point from the rates in December. And the bankers are shying away from the speculative buyers as well as small and medium size companies which have high credit risk.
Besides, the freight rates have also corrected; the Baltic index touched a low of 5615 on January 29 this year, and was at 7737 on April 4.
“There have been orders booked on speculation and as the cancellations come, we expect buying opportunities at a lesser price in the near future,” said Kowshik Kuchroo, vice-president, business development, of Mercator Lines that has tanker, product carriers as well as bulkers.
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