"Higher Iron Ore and Coal Volumes... PCL Expected to Benefit from Freight Rates in the Second Half": Daishin Securities

[Financial News] PCL is expected to benefit from stronger shipping freight rates in the second half of the year as bulk cargo volumes, including iron ore and coal, increase while vessel supply remains tight, analysts said.
Jini Lee, a researcher at Daishin Securities, said on the 4th, "The expansion of iron ore cargoes from Brazil and West Africa to China has rapidly absorbed available tonnage in the Atlantic, intensifying the tightening of vessel supply and demand." Lee added, "Demand for inventory building ahead of China's peak construction season and National Day is also supporting freight rates."
Lee expected this trend to continue in the second half. "Capesize freight rates are expected to remain steadily high as Atlantic-origin cargo volumes increase and bauxite shipments from Guinea expand," the researcher said.
Panamax freight rates are also expected to remain strong. Demand is rising to divide large cargoes among several Panamax-class vessels as Capesize rates increase. Seasonal growth in coal volumes is also expected to sustain the upward trend in freight rates.
Lee further explained, "In the second half, demand for thermal coal used in power generation is expected to increase as heating demand intensifies during winter in the Northern Hemisphere." Lee added, "If prices of alternative energy sources such as natural gas and oil remain high, coal imports and seaborne cargo volumes in Asia could expand."
The market for very large crude carriers (VLCCs) is also likely to maintain high freight rates. The average daily VLCC time charter equivalent (TCE), based on the Baltic Dirty Tanker Index (BDTI), reached $345,206 on the 1st, surpassing the previous peak of $318,777 recorded in March.
Lee analyzed, "Freight rates rose again as renewed tensions between the U.S. and Iran and attacks on vessels in the Strait of Hormuz increased uncertainty over transit." Lee added, "While higher risk premiums on routes from the Middle East to China and lower vessel utilization have reduced available tonnage, increased cargoes from Brazil and the U.S. Gulf to China, along with a shortage of Atlantic tonnage, are also contributing to further rate increases."
Lee forecast, "Although freight premiums reflecting the current restrictions on passage through the Strait of Hormuz are already being incorporated, high freight rates are likely to persist in the short term due to the actual reduction in available tonnage."
[email protected] Jung Won-il Reporter