Thursday, March 10, 2011

MISC falls to low of RM7.65, cautious outlook for sector

KUALA LUMPUR: Shares of MISC BHD [] fell to a low of RM7.65 in afternoon trade on Thursday, March 10, in line with the weak local and regional markets and further aggravated by the cautious outlook for the tanker sector.

At 4.09pm, it was down 16 sen to RM7.75. There were 469,400 shares done at prices ranging from RM7.65 and RM7.91.

Moody's Investors Service said the Middle East turmoil, rising bunker prices were adding to shippers' woes.

It said the the fundamental structural imbalance was still the key negative driver for the shipping industry. Besides the oversupply forecasted in the dry-bulk shipping industry, a similar demand and supply structural imbalance exist for liners and the tanker business over the next 12-18 months.

'Such pressures were evident in the weak performance of MISC's chemical, petroleum, and liner segments in its recently released fiscal third-quarter 2011 results,' it said in a report issued on March 7.

Moody's said shipping companies such as MISC (A3 stable) had adopted slow-steaming to reduce fuel usage, optimise voyage planning and routing, and deploy measures to monitor vessels' performance and fuel consumption.

Slow steaming refers to slowing down vessels to save fuel, while maintaining shipping schedules by adding vessels to routes.

However, such savings are limited, as the extension of transit time is restricted by the time sensitivity of shipments. Furthermore, the risk of engine damage increases at extremely low steaming levels if a ship is not designed for slow steaming.

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