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MOL puts the breaks on bulk fleet expansion

MOL puts the breaks on bulk fleet expansion

Tokyo: Mitsui O.S.K. Lines Ltd (headquarters pictured), the world's largest operator of iron-ore vessels, halted new orders for the ships as demand for steel drops, writes Bloomberg.

The company is scrapping up to seven iron-ore carriers and may not renew long-term charter contracts, Masafumi Yasuoka, a senior executive officer at the shipping line, said in an interview in Tokyo yesterday.

MOL may slow its expansion plans as economic growth in China, the world's biggest steelmaker and buyer of iron ore, expanded at the slowest pace in seven years last quarter. The Tokyo-based carrier had planned to increase its fleet of iron-ore carriers by 28% over six years to 160.

"We may fall slightly short of the target," said Yasuoka. "We're putting new ship orders and decisions about contract renewals on hold." He declined to say by how many vessels it may fall short of its goal.

MOL forecasts profit will decline for the first time in seven years in the business year ending this month as shipping rates have tumbled. It made over 90% of its operating profit from transporting commodities and cars last fiscal year.

Net income will drop 32% to 130 billion yen ($1.3bn), it said in January, reversing an earlier prediction for an increase.  [03/03/09]