Freshly restructured South Korean dry bulk shipping company Pan Ocean posted an almost 40 percent drop in earnings for the first quarter of this year amid tonnage oversupply coupled with subdued demand from the market.
Pan Ocean’s profit was USD 63.1 million in the first three months of this year against USD 103.9 million reported in the corresponding period last year, resulting in 39.2 percent fall.
The company’s revenue for the quarter rose by 3.6% year-on-year reaching USD 376.64 million.
The first quarter profit was affected by weak coal import from China and India, along with a decrease in iron ore export from both Australia and Brazil due to bad weather and longer maintenance duration of Brazil’s export port. Hence, daily BDI plunged to 290, the historically lowest level since 1999.
For the remainder of the year, Pan Ocean expects market situation to be similar to 2015 due to a chronic oversupply of tonnages and slow demand.
“So we will see more scrapping of tonnages, which could relieve current supply and demand imbalance and possibly improve the market in the near future,” the company said.
“While South America’s grain season is expected to keep supporting the market, decreasing coal import of both China and India keep downward pressure. However, China’s iron ore import is increasing beyond previous expectations so far thanks to the closure of high cost domestic iron ore mines and expectation of China’s stimulus. So, whether China iron ore import keeps increasing or not will be a key point for the future market prospect,” Pan Ocean added.