The dry-bulk market is dramatically lower than Mitsui O.S.K.'s forecasts,'' said Osuke Itazaki, an analyst in Tokyo at Credit Suisse Group. There's a very strong chance they will have to cut their earnings predictions.''
China's growth fell to the slowest in five years in the third quarter as it shuttered factories during the Beijing Olympics and a financial crisis cut demand for exports. The world's biggest user of iron ore cut steel production 19 percent in October, according to Macquarie Group Ltd. estimates.
The shipping line, which gets more than 90 percent of its profit from shipping commodities, said on Oct. 27 that its net income for the year ending March 31 would be 195 billion yen ($2.1 billion).
Buying Opportunity
Charter rates for the Tokyo-based company's largest ships tumbled to a record low of $2,364 a day on Dec. 1, according to the London-based Baltic Exchange, compared with Mitsui O.S.K.'s average forecast of $20,000 a day for the three months to Dec. 31. The company charters 15 of about 100 capesize vessels at daily rates.
The slump in charter rates has led some shippers to fail and may cause others to default on loans.
The Ukraine's Industrial Carriers Inc. filed for bankruptcy protection in October and Britannia Bulk Plc was placed in administration the same month. Half of commodity shipping lines are likely to breach loan terms in the months ahead as rental rates and vessel prices fall, Nordea Bank AB, the world's largest arranger of loans to the industry, said last week.
Mitsui O.S.K., which plans to boost its fleet by 37 percent by the end of March 2013, views the slump as a chance to buy weaker competitors, Yonetani said.
Building new ships isn't the only way to expand,'' Yonetani said. We'd consider buying out companies that approach us. There are some attractive shipping lines in Europe.'' He declined to name any companies.
Mitsui O.S.K. fell 1.9 percent to 457 yen at the 11 a.m. trading break on the Tokyo Stock Exchange.