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H1 horizon looking well for Korean bulk carriers amid spike in commodity prices

South Korean bulk carriers Pan Ocean Co. and Korea Line Corp. are expected to turn out strong earnings in the first half on spike in commodity demand and prices as well as shipping rates.

On Monday, shares of Pan Ocean gained 10.5 percent to end at 6,970 won ($6.18) while those of Korea Line added 6.9 percent to 3,705 won as investors bet on improved income.

The Baltic Dry Index, which tracks the average cost of shipping bulk cargo, reached 2,105 on March 17, up 47.6 percent from the end of 2020 and more than tripled from the first quarter last year.

Grain prices rose sharply due to an unusual cold snap in the U.S. that hurt crops and tariff raise by Russia. Steel demand in China also stays robust.

Global bulk shipping rates have gone on increasing in line with rising demand for bulk carriers. The strengthening trend is expected to extend to the second quarter, said an industry observer.

Market experts estimate Pan Ocean’s operating profit for the first quarter at 58.8 billion won, up 55 percent from a year earlier. Korea Line’s operating profit is projected to add 3.5 percent on year to 35.0 billion won.

Their income will likely become stronger in the second quarter by reflecting higher rates.
Source: Pulse

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