The Singapore unit of Indian bulker owner Mercator Lines has seen its loss worsen for the first quarter of its current financial year.
For the three months ending on 30 June 2015, the company suffered a USD9.896 million loss, compared with a USD7.123 million loss for the same period in 2014.
The company, led by Shalabh Mittal, blamed the weak freight market for the loss. The Baltic Dry Index (BDI) plunged to a historic low in February and a sustained recovery is far from imminent, as China’s economy slows and a slew of newbuildings are scheduled to be delivered this year.
Mercator Lines (Singapore) operates 13 bulkers and all of them are either Panamaxes or Kamsarmaxes.
The company said, “The dry bulk shipping industry continues to remain volatile with the BDI closing at 800 points as on 30 June 2015 as compared to 596 points as on 1 April 2015.”
The BDI has recovered to 1,118 points on 22 July after dropping to an unprecedented low level of 509 points on 18 February. The market rate for Panamax vessels closed at a rate of USD6,734 per day as on 30 June, compared with USD4,762 as on 1 April.
The average market rate for Panamax vessels for 1 April-30 June was USD5,189 per day as against USD6,304 in the corresponding period in the previous year.
Mittal said, “The company continued to outperform the Baltic Panamax Index rates. We are seeing some early signs of recovery in the industry and would carefully monitor the markets to take advantage of the recent spike.”
On 26 May, the company received statutory demands from Cargill International and Cargill Financial Solutions in relation to certain deferred purchase contracts.
Mercator Lines (Singapore) has appointed an independent financial adviser to assess and establish the various financial options. In addition, the company has also appointed an investment bank to help it raise funds.