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STX Pan Ocean anticipates profit in 2Q 2009

STX Pan Ocean anticipates profit in 2Q 2009

Seoul: Leading Korean dry bulk company STX Pan Ocean has revealed that it expects to return to profit in the second quarter as China's economic-stimulus efforts help boost rates, writes Bloomberg.

"The first quarter may be the worst, but we expect a strong rebound from the second quarter," ceo Lee Jong Chul, told the newswire in an interview in Seoul. STX Pan Ocean also expects to meet a target of 10 trillion won ($6.6bn) in sales this year, including trading businesses at a unit, he said.

Shipping rates have more than doubled this year on optimism China's 4 trillion yuan ($585bn) spending plan will stoke demand to move iron ore and coal. STX returned chartered ships, delayed taking new vessels and posted its first loss in at least six quarters as the worst financial crisis since the Great Depression pushed global economies into a recession.

"The bulk-shipping industry seems to have emerged from its black hole," said Um Kyung A, a Seoul-based analyst at Shinyoung Securities Co. "Given the current environment, the best they can wish for is to be shipping cargos, not parking their vessels."

Faced with overcapacity and slumping trade, STX Pan Ocean expects a record 25m dwt of dry bulk carriers to be scrapped this year, five times more than in 2008. About 10% of total global dry bulk fleet will likely be demolished by the end of 2010, the company said in a statement to Singapore exchange today.  

The company has secured delays of six-to-18 months on almost half of the 46 ships it has on order, and is accelerating plans to retire older vessels, Lee said. Many chartered vessels have been returned, cutting the fleet to 268 now from a peak of about 500 in September.    [26/02/09]