Sinotrans triples profit on firm charter rates

Mainland bulk carrier operator Sinotrans Shipping more than tripled its first-half profit after charter hire rates surged on strong demand for iron ore and coal.

Net profit at the Hong Kong-listed firm surged to US$190.8 million from US$57.6 million a year earlier and turnover climbed to US$234.4 million from US$130.6 million, a 79.5 per cent jump. The Baltic Dry Index averaged 8,557 for the first half of the year, a 61 per cent jump from last year's 5,310.

The company said bookings had been secured for 85.1 per cent of dry-bulk operating days this year and 19.7 per cent for next year.

One new double-hull very large crude carrier and three container vessels were delivered in the first half. A new container vessel with a capacity of 847 20-feet equivalent units will be delivered in the second half and 10 more vessels have been ordered for delivery from next year to 2011.

The Baltic Dry Index posted a 12th consecutive drop on weaker demand and Goldman Sachs downgraded its rating for China Cosco, the country's largest shipping firm, to a sell from neutral on Monday, citing an oversupply of freight capacity in coming years and weaker expectations for the next two years.

However, Sinotrans chairman Zhao Huxiang said China's robust demand for iron ore, coal and crude oil as well as the stable increase in seaborne volume globally were a positive sign for the shipping market.