HMM, a company primarily focused on the container shipping business, has decided to place a new order for petrochemical carriers, also known as product carriers (PCs).

According to industry sources on August 19, HMM’s board of directors approved a new facility investment for the construction of petrochemical carriers this June. HMM stated, “We have decided to place a new order for bulk carriers capable of transporting petrochemical products.”

According to the shipping and shipbuilding industries, the PCs that HMM plans to order are medium-range (MR) tankers, with an estimated price in the low $500 million range (approximately 67.9 billion won). Among domestic shipbuilders, HD Hyundai Mipo Dockyard has been actively securing orders for MR tankers.

The price of new PC vessels has been on a steady rise this year. This trend is driven by the increasing demand for PCs as global oil companies continue to refine crude oil into products for export. In April, HD Hyundai Mipo secured an order for petrochemical carriers at around 69.7 billion won (about $51.75 million.) per vessel. According to the shipbuilding industry, the price of new PC vessels was approximately $46 million a year ago.

The shipping industry anticipates that HMM will diversify its revenue sources by expanding its fleet to include various types of vessels. As of the second quarter, HMM operated 73 container ships, 17 tankers which include 14 crude oil carriers and three product carriers, 10 dry bulk carriers, and eight multipurpose vessels.

HMM’s profitability in the bulk carrier segment has been relatively low. Revenue from the bulk carrier segment increased to 687.8 billion won in the first half of this year, up from 585.5 billion won during the same period last year. However, operating profit decreased by 9.7 percent to 87.5 billion won, compared to 96.9 billion won last year. The proportion of operating profit from the bulk segment declined from 20.8 percent in the first half of last year to 8.3 percent in the first half of this year.

Shipping companies facing geopolitical risks benefit from diversifying their fleets to secure stable revenue sources in the long term. With the third quarter being the peak season for the shipping industry and shipping rates expected to remain above average due to the impact of the Red Sea crisis, HMM’s decision to invest in new vessels appears to be a strategic move.

In the first half of this year, HMM reported a revenue of 4.99 trillion won and an operating profit of 1.05 trillion won. The company also recorded a net profit of 1.15 trillion won.

Source: Businesskorea