Pacific Basin Shipping Ltd, a Hong Kong-based dry bulk shipper that is raising up to HK$1.27 billion (US$162.5 million) in an IPO, said on Tuesday it expects rates to return to an upward trend following recent weakness.
The Baltic Dry Index, a benchmark for bulk shipping rates, has fallen by more than half from its record high of 5,681 reached in February, but is up seven percent from a year low of 2,622.
Port congestion, partly due to booming Chinese demand for raw materials, fuelled a rate-boosting capacity shortage starting in the second half of 2003. Demand for shipping capacity has cooled since Beijing took austerity measures to prevent the economy from overheating.
"Rates have been coming down recently because they were up in a squeeze earlier in the year," Chief Executive Mark Harris said.
"The trend is still towards improving in a very good market," he told a video conference from Frankfurt, where the company is marketing its share offering.
The company will test a Hong Kong market that has proven selective when it comes to new issues, embracing some listings but shunning others.
Earlier this month, China Container Shipping Lines met an icy Hong Kong reception, sinking 12 percent on its first day of trade. Shares in the mainland's second-largest container line, which had cut its IPO by more than half its initial target to US$985, remain 15 percent below their offer price.
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