Investors rushed to bet on a global trade recovery and a boon for Korean sea carriers and shipbuilders on eased trade protectionist wave under a new Democratic president in the United States.
Shares of Korea Line Corp, a bulk carrier, jumped by the 30-percent daily limit on Monday. HMM Co, the country’s largest container carrier, gained 16.1 percent, another bulk carrier Pan Ocean Co. 21.2 percent, and KSS Line 6.1 percent. They extended gains on Tuesday. HMM added 7.87 percent and HMM 4.2 percent. Pan Ocean and KSS Line have slowed down a bit, finishing the day up 0.12 percent and down 0.49 percent, respectively.
Their rally has been driven by strengthening global sea freight rates.
The Shanghai Containerized Freight Index, a benchmark for spot market prices, hit 1,664.56 last Friday, the highest since October 2009. The index gained 134.57 points from a week earlier.
The spot rates on routes to Europe rose 9 percent and to Singapore nearly doubled last week alone.
The index on Asia-U.S west coast leg even hit record high of $3,871 per forty-foot equivalent unit (feu), as year-end shopping season including Black Friday nears.
The shipping demand on the Asia-U.S. route continues to grow after making a rebound in the third quarter, said Choi Goh-woon, a Korea Investment & Securities analyst. Industry watchers anticipate the global shipping demand stay robust next year.
There also is growing anticipation for improvement in U.S-China relations under the new Biden administration, which would help ease global trade tensions.
Industry watchers anticipate the pickup in global shipping demand to benefit shipbuilders as well. While exporters are having trouble finding carriers amid rising global shipping demand, the inactive fleet capacity level recently has fallen below last year’s level.
Shares of Korean shipyards are flying high. On Monday, Korea Shipbuilding & Offshore Engineering Co., the country’s largest shipbuilder, rose 8.7 percent. Hyundai Mipo Dockyard added 13.1 percent and Samsung Heavy Industries 8.3 percent.
On the same day, Korea Shipbuilding & Offshore Engineering disclosed that it secured a contract to build two 300,000-ton oil tankers for 201.9 billion won ($180 million).
Source: Pulse
