Essar Shipping planning to achieve 25 MTPA capacity by 2020

Posted by Daily Shipping Times on 21-12-2017        Tweet

Essar shipping currently has 14 vessels and plans to increase the count to 18 by FY19

MUMBAI: Essar Shipping, the only listed company of the Ruias-held Essar Group, is in expansion mode. It has recently increased its cargo carrying capacity to 18 million tonnes per annum (mtpa) and is all set to further ramp it up to 25 mtpa by 2020, even as it is looking to grow its third-party business. Ranjit Singh, ED and CEO of Essar Shipping, said the company has taken its total cargo handling capacity to 18 mtpa from 13 mtpa earlier this year and plans to take it to 25 mtpa by 2020. “We have maintained the 70:30 ratio for captive and third-party cargo. When we move to 25 mtpa, our third-party handling capacity would rise to 9 mtpa from current 4 mtpa,” Singh said. At present, the company handles 4 mtpa of third-party cargo and aims to increase it to 6 mtpa by the end of FY18. At 6 mtpa of the 18 mtpa capacity, the third-party business will account for 33%, and this will rise to about 36% by 2020, when 9 mtpa of the 25 mtpa is dedicated to such business. This small shift will marginally reduce dependence on business from Essar Steel, its captive customer, which accounts for the bulk of its business. While questions remain about the steelmaker’s future, Essar Shipping is confident that in any eventuality its business relationship should continue.

The third-party business mostly involves moving cargo to West Asia — between Oman, Qatar and the UAE. Iron ore and coal movement between Australia and China is the other key route. The captive business, on the other hand, involves movement of iron ore and coal through two Handymax size vessels from the East Coast of India (Paradip and Vizag terminal) to the West Coast (Hazira terminal). “We plan to buy few vessels or get them on charter to handle finished products of Essar Steel as well, which is currently handled by other players. Besides, there are finished steel products of Jindal and Tata that can be handled by us,” Singh said. Essar Shipping currently has 14 vessels and plans to increase the count to 18 by FY19. The current fleet includes two Very Large Crude Carriers (VLCCs), one Capesize, six Minicapes, one Panamax, two Supramaxes and two Handysize bulk carriers. Some of the company’s third-party customers in the VLCC segment are BPCL, IOC, Trafiguara and Honda Merchant Marine.

The company also plans to scrap one Capesize vessel, which is likely to fetch around $8-$9 million, and buy a younger Panamax size vessel. “Despite the increase in asset prices by around 30% in the last seven to eight months, the prices are still very low for companies to look at asset purchases. We have one 18-year-old Capesize and one 25-year-old vessel that we may look at replacing with Panamax, Handymax and Product Carriers in the coming months,” Singh said.