Shares of shipping lines surge on rising rates

(ATTN: UPDATES share prices in 2nd para)
SEOUL, Feb, 5 (Yonhap) -- Shares of Hanjin Shipping Co. and other South Korean
shipping lines extended their gains to a third session on Thursday as a key index
measuring shipping rates jumped.
Hyundai Merchant Marine Co., the country's No.2 shipper, gained 3.55 percent to
close at 32,100 won (US$23.2) on the Seoul bourse. Hanjing Shipping, the nation's
leading shipping line, edged down 0.46 percent to end at 21,600 won, after rising
as much as 6 percent. STX Pan Ocean Co., the nation's largest bulk-shipping line,
slipped 0.87 percent to 111,350 won.
The Baltic Dry Index (BDI), a key barometer of commodity shipping rates, jumped
15 percent to 1,316 Wednesday in London, after breaking through the 1,000-mark on
Jan. 27. The index, after hitting a record of 11,793 on May 20 last year, dropped
to as much as 663 on Dec. 5, as the global economic downturn reduced shipping
demand.
The rising BDI indicates the shipping industry might have hit the bottom, but it
is too early to say the sector is set to recover, according to Song Jae-hak, an
analyst at Woori Investment & Securities.
"The rising BDI is very positive, helping shipping lines gain further," said
Song. "But the global economic slump is still underway, and it is hard to declare
that the shipping industry has hit the bottom, and investors are tempted to lock
in part of gains."
On Thursday, Hanjin Shipping said it plans to liquidate German unit Senator Lines
GmbH as shipping rates collapse amid the global recession.
Other analysts also remained cautious about the short-term outlook for shippers
as a global economic downturn is expected to shrink demand for bulk carriers to
ship coal, iron ore and other commodities.
"The shipping industry's meaningful turnaround will rely on whether such
industries as the automaking sector will recover," said Lee Jae-won, an analyst
at Tong Yang Investment Banking.
Lee forecast the BDI would remain at a level ranging from 1,300 to 1,400 this year.
The country's shipping lines logged hefty profits last year as shipping demand
remained higher.
Hanjin Shipping this week reported that its profit more than doubled to 320
billion won. Hyundai Merchant also said its net profit rose to a record 704
billion won last year from 177 billion won a year earlier.
sam@yna.co.kr
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