World News
Norden Bets on Falling Rates
Dampskibsselskabat NORDEN A/S (Norden) is basing its strategy for 2013 on profiting from falling transport rates, and analysts expect it to succeed, Bloomberg reports.
The Denmark-based shipping company has booked 20 percent more cargo for the year than its ships can carry, which means it can turn a profit if rates fall and it can charter other ships at a lower cost than it has contracted with clients for.
Analyst reports compiled by Bloomberg predict a net income of $23 million for the company this year, compared with a loss of $284.1 million in 2012.
Observers have predicted that gap between the supply of tonnage and transportation demand will grow in 2013.
"Panamax is the segment with the largest order book, and supply is still growing faster than demand," said Finn Bjarke Petersen, an analyst at Nordea Markets.
"Norden is positioned to do better because of their coverage, so they will be able to generate cash flow and pay out dividends even in a very weak market."
Norden Panamax contracts for 2013 average $13,835 per day, which means it can profit by hiring ships for less than that.
In the third quarter of 2012, Norden achieved a net profit of $16.1 million thanks to bunker hedging despite a loss from operations of $580,000.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 502.00 | 7.00 | 617.00 | 6.00 |
| Rotterdam | 455.00 | 8.00 | 619.50 | 4.00 |
| Houston | 467.00 | 4.50 | 625.00 | 2.50 |
| Fujairah | 495.00 | 6.00 | 712.50 | 1.50 |
| Global 20 Ports Average | 524.50 | 4.50 | 710.50 | 4.00 |
| Global 4 Ports Average | 479.50 | 6.50 | 643.50 | 3.50 |
| Global Average Bunker Price | 570.50 | 2.00 | 747.50 | 5.50 |
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