Mitsui O.S.K. Lines Revises Business Outlook
Looking at the Company’s business performance for the first half of FY2015, operating income and ordinary income improved as the tanker division enjoyed favorable market conditions, backed by a decline in bunker prices, says Mitsui O.S.K. Lines (MOL).
On the other hand, net income for the second quarter decreased from the previous announcement because the Company recorded an extraordinary loss from the stock revaluation of its equity method affiliate, Daiichi Chuo Kisen Kaisha (“Daiichi Chuo”), as a result of that company’s decision to commence civil rehabilitation proceedings.
The Company made a downward revision of its full-year business performance compared to the previous announcement, by taking into account situations such as the delay in recovery of thecontainership and dry bulker markets, while anticipating continued strength as the tanker market enters the winter demand season.
Looking at the maritime shipping market conditions, the dry bulker market remained weak until about June, then an increase of shipment volumes of iron ore for long-distance transport from Brazil hiked the market temporarily over the summer, but later, concerns over the economic slowdown in China strengthened and dry-bulker shipment volumes declined.
The very large crude oil carrier (VLCC) market was continuing at a high level, stimulated by growth in actual demand and an increase in the nations’ strategic petroleum reserves due to lower crude oil prices. Then, despite a sudden drop in the VLCC market, mainly due to the effect of the low demand period over summer, the ma rket recovered from the start of September.
The containership market remained extremely weak on all routes, reflecting the low cargo volumes coming out of Asia.
The Capesize bulker market remained at the weak level of US$5,000 per day on average until June. However, there was a slight reduction in the number of vessels in the whole industry from the previous period owing to the ongoing scrapping of vessels in res ponse to weakness of the market, and the shipment volumes of iron ore from Western Australia maintained a solid trend.
In addition, there was a rise in shipment volumes of iron ore for long-distance transport from Brazil in and after June, leading to a positive turnaround. The market rose to as high as the level of US$20,000 per day in August. Later, however, the market began weakening again due to heightened concerns over the economic slowdown in China. The markets for Panamax on down, mid- and small-sized vessels, were weak as the oversupply of vessels remained unresolved.
