Tokyo: Mitsui O.S.K. Lines, Japan's most profitable shipping line, may mothball some of its largest vessels for the first time in over two decades as charter rates have fallen 98 percent over the last five months, Bloomberg reported. The world's largest merchant fleet operator may also scrap seven of its capesize ships, used for transporting iron ore and coal, from a fleet of about 100, Masafumi Yasuoka, senior executive officer at the shipping line, said in an interview in Tokyo. Mitsui O.S.K., which makes over 90 percent of its profit from shipping commodities, may lower its earnings forecast for a second time if rates stay near a record low, Yasuoka said.
The company predicts its net income will be 195 billion yen ($2 billion) for the year ending March 31. The prediction is 2.5 percent higher than last year's profit as it forecasts sales will increase 5.4 percent to 2.05 trillion yen.
Mitsui O.S.K offers 15 of its capesize ships at daily rates, with others on medium-term and long-term contracts, Yasuoka said.
Charter rates for capesize vessels fell 0.8 percent to a record low of $3,966 a day in London Friday, according to the Baltic Exchange. Mitsui O.S.K. forecasts they will average $30,000 in the six months to March 31. Rates have dropped 98 percent from the record $233,988 reached in June.
''We're suffering with our short-term charters,'' Yasuoka said. ''We haven't mothballed our capesize ships since the 1980s.''
The company is looking for a bay in the Philippines where it can station the ships and remove their crews. Mothballing, or laying-up, vessels normally takes them out of action for months or years and is a longer-term commitment than putting down anchor and waiting for rents to advance.
China's iron-ore imports are unlikely to grow next year for the first time since at least 1999 because of slowing demand from steel mills, the China Metallurgical Mining Enterprise Association said this week. Imports will probably remain at 400 million metric tons, unchanged from 2008, the association said.
The shipping line still plans to expand its capesize fleet over the next five years, Yasuoka said.
The company will increase its iron-ore carriers to 160 by the end of March 2014, including panamax and capesize ships, from 125 at the end of March. It had 874 ships in its fleet at the end of March, 13 percent more than the second-largest merchant fleet operated by Japanese rival Nippon Yusen K.K.
Mitsui O.S.K. is down 66 percent in Tokyo trading this year. It rose 2.8 percent to 482 yen as of the end of trading in Tokyo Friday, in line with a 2.7 percent gain in the Nikkei 225 Stock Average. [17/11/08]
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
