Product and chemical tankers proved the only positive segments for Mitsui OSK Lines in second quarter results released Tuesday show.
The Japanese giant saw net income slump nearly 75% to ¥150.7bn ($1bn) for the quarter as the boost to its bottom line caused by the Covid-19 pandemic continues to wear off.
MOL’s energy segment, which includes the two tanker types, was the only shipping segment to report a year-on-year increase in ordinary profit up 70% to ¥37.6bn.
“The product tanker market rates remained at a high level on the back of firm demand for petroleum products, although there were times when shipments weakened due to scheduled maintenance at oil refineries in the Far East,” the shipowner said.
“Chemical tankers also performed strongly, with market rates remaining at a high level. In this market environment, profit increased year-on-year as a result of stable fulfilment of existing long-term contracts and cost reductions.”
Container ships, in contrast, reported a 93.2% decline in second-quarter operating profit to ¥33.3bn as spot freight rates declined, reflecting overcapacity caused by an increase in new vessel deliveries.
MOL said the tight tonnage situation in the car carrier market continues with the recovery of cargo movements with the normalisation of domestic completed car production and shipments of electric vehicles from China continuing to be brisk.
“However, port congestions in some regions, such as Australia, and drought in the Panama Canal caused delays in cargo deliveries, [resulting in lower-than-anticipated profits], despite the flexible revision of vessel allocation plans,” the shipowner added.
MOL’s dry bulk business reported a year-on-year decline of almost 7% in second-quarter results to ¥32.1bn as pessimism over China’s economic recovery dampened confidence and market rates lacked buoyancy.
“Capesize bulker market rates remained steady on strong Australian and Brazilian iron ore shipments, but market rates fell temporarily at the end of August but then rebounded with the end of the rainy season and demand for coal shipments to India and China,” MOL said.
“Meanwhile, the market rates for panamax, handymax, and smaller vessels temporarily recovered from August due to a slight improvement in vessel supply and demand with relatively firm coal and grain shipments.
“Under these market conditions, the dry bulk business posted a year-on-year decline in profit, falling short of the high market conditions of the previous year,” MOL added.
Looking ahead, MOL has upgraded its full-year profit forecast by just ¥5bn to ¥220bn on the back of revenue from increased vessel sales.
