Pacific Basin has seen a 73% decline in its 2019 first half profit on the back markedly weaker dry bulk freight market conditions.
The Hong Kong-listed handysize and supramax specialist made just $8.5m in the first six months of the year against $30.8m 12 months earlier.
“One-off negative demand factors led to markedly weaker dry bulk market conditions early in the year which adversely affected our results,” Pacific Basin said.
“The US-China trade war and African Swine Fever impacted soybean imports to China, flooding in the Mississippi River impeded grain exports from the US, and damage to mining infrastructure disrupted Brazilian iron ore exports while severe weather disrupted Australian iron ore exports,” said chief executive Mats Berglund.
Pacific Basin said that while its average handysize and supramax daily TCE earnings of $9,170 and $10,860 per day net were down 6% and 7% year on year, its out-performance over the BHSI and BSI indices increased to 59% and 39% respectively.
“Market rates have been firming, the outlook for our minor bulk segments is positive and we are well positioned for the future,” it said.
Looking ahead, Pacific Basin said the easing of export disruptions in Brazil, sound minor bulk demand growth and IMO 2020 effects on the global fleet bode well for the freight market.
“We expect to see stronger freight market conditions in the remainder of 2019, although with continued volatility due to uncertainty about the trade war, slower economic growth than in recent years and the impact of African swine fever on soybean imports to China,” it said
“We still see upside in secondhand vessel values and will continue to look opportunistically but cautiously at acquiring good quality secondhand ships.”
