Japanese Dry Bulk Shipper Daiichi Chuo Files for Bankruptcy

By Aaron Sheldrick and Keith Wallis

TOKYO/SINGAPORE, Sept 29 (Reuters) – Japanese bulk service Daiichi Chuo Kisen Kaisha stated on Tuesday it had filed for defense from collectors – the second shipper to take action this month – with analysts predicting extra failures if the marketplace for dry freight continues to droop.

The delivery business has been hit exhausting by the worldwide commodities meltdown with the dry freight market close to six-year lows and charges for giant ships carrying iron ore and coal barely overlaying working prices this yr.

Daiichi Chuo stated it had been unable to make ends meet on ships it had chartered or finance ships it had ordered, leaving it and a completely owned subsidiary with a mixed 176.9 billion yen ($1.5 billion) in liabilities – a determine it stated might rise.

The shipper, which has suffered 4 straight years of losses, is about to be delisted on Oct. 30. That could be a uncommon case of listed company failure since Prime Minister Shinzo Abe returned to energy in 2012 with aggressive insurance policies to spice up the financial system.

The transfer follows non-public equity-backed Global Maritime Investments Cyprus Ltd’s submitting for Chapter 11 chapter safety within the United States on Sept. 15.

“If such a market is sustained we can expect a few more companies to be in line,” stated Jayendu Krishna, director at Drewry Maritime Advisors.

Shares in different Japanese shippers tumbled on the information with Mitsui OSK Lines Ltd, Daiichi Chuo’s largest shareholder, sliding 7.7 p.c. Traders stated, nonetheless, that the submitting could be a aid for Mitsui OSK because it had needed to prop up Daiichi Chuo up to now with capital injections.

Mitsui OSK, which owns 16.6 p.c of Daiichi Chuo, stated it might e-book a rare lack of about 25 billion yen within the July-September quarter.

Despite the filings, some market consultants stated a rebound in dry bulk may very well be swift.

“I agree dry bulk looks gloomy but we feel we’re much closer to the end of this part of a downcycle than we are to the beginning,” stated Martin Rowe, managing director of Clarksons Platou Asia, a delivery companies agency, in Hong Kong.

The information got here as Asian commodity shares have been battered after shares in Glencore Plc fell nearly 30 p.c and closed at a file low on Monday over considerations it was not doing sufficient to chop its debt to resist a protracted fall in international metals costs.

($1 = 119.72 yen) (Reporting by Aaron Sheldrick and Keith Wallis; Additional reporting by Osamu Tsukimori and Ayai Tomisawa in Tokyo; Writing by Christopher Cushing; Editing by Edwina Gibbs)