Red Sea News-Shipping Corp, other shipping, ports in focus as Red Sea route gets disrupted

  • Stock market today- Share prices of Shipping Corporation, Great Eastern Shipping and port operators after steep corrections of up to 6% on Wednesday though may have rebounded on Thursday, however near term challenges on freight rates, crude price spike do persist as Red Seas route sees disruption.

Ujjval Jauhari
Updated21 Dec 2023, 01:11 PM IST
Red Sea News- Shipping and port stocks in focus as crisis unfolds.
Red Sea News- Shipping and port stocks in focus as crisis unfolds.

The share price of shipping companies and port operators remain in focus with rise in Houthi attacks in the Red Sea leading to disruption in the shipping route . The Share prices of Shipping Corporation of India and Great Eastern Shipping Company after correcting 1.7-5.8% on Wednesday though rebounded on Thursday , nevertheless analysts remain cautiously watchful.

Houthi attacks have started disrupting and shutting down red sea merchant ships. Ever since the Israel- Hamas Conflict started on October 7th, there have been rising incidents of attacks on commercial vessels in the Red Sea being reported. With the escalation of attacks seen off late may shipping companies and oil industry giants have now decided to pause shipping through the region. As the situation is developing the same is sparking fears on global supply-chain disruptions and the rise in shipping rates, said analysts.

Also Read- Mazagon Dock Shipbuilders, Cochin Shipyards shares jump after defence order

The experts have started being cautious and feel escalation of the situation can lead to a rise in oil prices and even freight costs.

 Chokkalingam G. Founder, Equinomics Research Pvt Ltd said that oil prices have already started rising on improved demand expectations with the interest rate cycle likely to have peaked out and rate cuts now being anticipated in 2024. The US oil reserves have also been depleted. Thus, any escalation in the situation in the red sea can definitely be a cause of concern.

Speaking on the share price movement Chokkalingam said that we are in a bull market many times negative news gets ignored.

It is not only shipping companies but port operators also seeing volatility in their share prices. The share prices of Adani Ports and special economic zone, Gujarat Pipapav Port, JSW Infrastructure also had seen sharp and close to 6% correction in their share prices on Wednesday.

The threat while is looked as near-term challenge, however some experts feel that solution to the problem is also expected soon.

Our sense is that the Houthi attacks in the Red Sea is a near-term challenge and would be addressed by Western countries going forward., said Manish Chowdhury, Head of Research, StoxBox. 

Also Read- Benchmark Computer share price see a strong opening. List 21.21% higher at 80

With the Suez Canal-Red Sea route constituting about 10-12% of the global trade, some upward momentum can be seen in shipping rates as the trade would now be routed through the African route which would consume more time , said Chowdhury. However, it is not likely to affect the medium-to-long term outlook for shipping stocks such as Great Eastern Shipping Company and Shipping Corporation of India. Additionally, any spike in crude oil prices due to the current scenario would likely be temporary as it does not alter the demand-supply dynamics of crude, said Chowdhury. Chowdhury does not expect any material impact on the inflation trajectory due to this unprecedented event.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

 

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First Published:21 Dec 2023, 01:11 PM IST
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