MISC Bhd"s decision to cut by half its order for eight chemical tankers with SLS Shipbuilding Co Ltd is considered a smart move in view of the uncertain demand outlook this year.
MISC Bhd"s decision to cut by half its order for eight chemical tankers with SLS Shipbuilding Co Ltd is considered a smart move in view of the uncertain demand outlook this year. MISC had, in July 2007, confirmed an order for eight 45,000 dead weight tonne (dwt) chemical or product oil tankers worth a total of US$430mil with SLS of South Korea. The first three ships were scheduled for delivery this year and the remaining five in 2010.
?Following amicable negotiations, MISC and SLS have come to a mutual agreement on the revision of orders to the benefit of both parties,? said MISC said in statement on Monday, without elaborating.
TA Securities, in a report, viewed positively the move by MISC to mitigate the risk of the falling demand in the chemical tanker sector.
?We are not surprised by the news as we have mentioned in our previous report that the drop in demand for chemicals, vegetable oils and palm oil following the global economic downturn will reduce the demand for chemical carriers,? it said.
TA said the cut in the orders was also to prevent further deterioration in the earnings from the chemical transportation business.
?Despite the 109% surge in revenue, MISC"s chemical business suffered a loss of RM7.5mil in the first half of the current financial year ending March 31.
?The loss was mainly due to higher bunker cost, coupled with softer freight rates towards the end of the second quarter. The results were also somewhat dampened by lower earning days due to the hijacked Bunga Melati 2 and Bunga Melati 5,? the report said.