STX Pan Ocean expands dry-bulk fleet to strengthen core capabilities

STX Pan Ocean Co., Ltd., one of the leading shipping companies in Korea, announced that it has comminssioned Nantong NIKKA Shipbuilding Co., Ltd. to build one new handy bulker with a capacity of approximately 29,000 DWT at over 20million dollars.

This handy bulker will be delivered in 2008.

Another handy bulker, which is expected to be delivered between Nov. 2008 and Jan. 2009, will be chartered by STX on a long term time charter(T/C) basis for 7 years. STX has the option to purchase upon expiration of seven years T/C.

The new orders are made in view of the positive outlook of the handy dry bulk market where demand remains robust with the Baltic Dry Index(BDI) expected to continue at a level of 4,000 due to strong demand for ships from China. A good demand growth of dry bulk trade is also expected to continue in view of the strong demand for import of iron ore and coal; and the export of cement and steel products.

In addition, 43percent of the global fleet of handy bulkers will be more than 27 years of age by 2010.

Concurrently, the dry bulk market is experiencing a likely decrease in global fleet supply with increasing demolition of aged vessels. The goal market is expecting to see an estimated scrap tonnage of 1.6 to 4.6 million DWT from 2006 to 2008. Most of the demolition would be for vessels above the age of 27 years, which will represent 18.3percent of total global fleet by 2010. With this estimated rate of demolition, the net tonnage supply is estimated to be at 15.6million DWT by 2008.

Mr Lee Jong Chul, President and CEO of STX Pan Ocean said, ?n view of the recent BDI upturn due to sustained demand-driven factors like the robust iron ore trade from Brazil to China, long-haul steel and cement exports from China and port delays in Australia; as well as a tight dry bulk fleet supply, STX believes that there is continued potential for growth. On top of that, the trend going forward for the handy market, which is our core business area, appears to be exceedingly stable as a larger percentage of dry bulk fleet hit the scrapping age and a much lower level of new deliveries.??ith the positive outlook of the handy market, we are making efforts to further strengthen our core capabilities in dry bulk carriage by replacing aged vessels with new ones, as well as with second-hand tonnage. We believe we should be able to harness further growth with this stable demand taken together with a continued tight fleet supply, going forward,?Mr Lee added.