Shipyards could shift their focus from construction of mainstream vessels to offshore vessels on strong replacement demand, said a GE Shipping release issued for its July-September performance.“Excess new building capacity, exacerbated by possibility of yards switching from main fleet shipping to offshore remains a cause of concern,” said the outlook in the GE Shipping release.
The shift towards offshore vessels stems from the fact that the exploration and production of crude oil and gas continue to grow at a good pace.
The geopolitical developments and liquidity infused by Central Banks have provided support to oil in recent times. This is against a backdrop of weak fundamentals caused by falling demand from OECD nations and lower growth rate in emerging economies, the release said.
“While a sustained drop in oil price can impact activity in the offshore sector, demand for shallow water drilling is not likely to be impacted significantly due to lower breakeven levels,” the release said.
During the July-September quarter under review, GE Shipping saw 6% rise in its crude carrier charter earnings over the corresponding quarter last year while product carriers and dry bulk reported decline of 22% and 18% respectively for the same period.
During the July-September quarter, the tanker market continued to remain under stress. A sharp drop in tonnage demand coupled with steady fleet addition and lower Middle East crude exports kept the charter rates under pressure, the release said.
Shutdown of a major refinery in Venezuela and continued decline in the US imports added to the woes resulting in lower fleet utilization, the release said.
In the dry bulk segment, freight rates remained under pressure as anticipated. Subdued commodity demand on the back of weak global sentiments and excessive new fleet growth kept a lid on any potential improvement in the freight rates, the release added.
For the July-September quarter, the company reported a consolidated net profit of Rs. 81.20 crores compared to Rs. 17.31 crores in the same quarter a year ago. Revenue including other income in the second quarter grew to Rs. 773.06 crores from Rs. 736.60 crores in the corresponding period last year.
Shutdown of a major refinery in Venezuela and continued decline in the US imports added to the woes resulting in lower fleet utilization, the release said.
In the dry bulk segment, freight rates remained under pressure as anticipated. Subdued commodity demand on the back of weak global sentiments and excessive new fleet growth kept a lid on any potential improvement in the freight rates, the release added.
For the July-September quarter, the company reported a consolidated net profit of Rs. 81.20 crores compared to Rs. 17.31 crores in the same quarter a year ago. Revenue including other income in the second quarter grew to Rs. 773.06 crores from Rs. 736.60 crores in the corresponding period last year.
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