Hong Kong-listed Sinotrans Shipping predicted that its profit would fall significantly year on year (y/y) for the first half of 2015 and the company may drop into considerable losses during the period.
Such substantial decrease in profit or considerable loss is mainly the result of the company’s continual slowdown of growth in international trade and dry bulk seaborne volume as a result of the weakening of economic growth in China and other emerging markets in 2015, a stock filing of Sinotrans Shipping said on 9 July.
The supply of global dry bulk capacities is tremendously in excess of the demand for dry bulk cargoes in recent years, leading to a sharp decrease in the charter hire rate and freight, the company added.
As of 30 June, the Baltic Dry Index only recorded an average of 623 points from 1,179 points in 2014, representing a y/y decrease of 47%.
In addition, the company booked a loss caused by the disposal of aged vessels.
However, the company insisted that its financial position remains stable.
In the first half of 2014, Sinotrans Shipping’s profits surged 521% y/y to USD10 million owing to a rebound in the dry bulk shipping market and the cut in operating costs. Its revenues also rose 21% y/y to USD112.7 million during the same period.