India-based Mercator Lines saw its first quarter net profit slashed by 90% amid the depressed state of the global dry bulk shipping market, Seatrade Asia online reports.
Net profit at the Singapore-listed company slumped to $401,000 during the quarter compared to $3.89m seen in the same quarter of 2011.
Revenue for the quarter ended 30 June 2012 also fell 19% year-on-year to $30.73m. The decrease was mainly due to fall in spot rates, according to Mercator.
“Oversupply of tonnage continues to remain the most serious concern around the dry bulk shipping industry,” Mercator commented.
With world economy forecasted to grow at a lower rate of 3.5% in financial year 2012 compared to 3.9% a year ago, the growth rate of the dry bulk shipping industry is likely to be adversely impacted as well, the company said.
“However, this could be offset by low market prices for coal and iron ore which could stimulate China to source a relatively higher share of its raw material demand from the international market, instead of utilising high cost domestic capacity,” it said.
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