Around 200 bulk carriers operated by South Korea’s STX Pan Ocean Co Ltd are out of action after the firm went into receivership last month, a company source said, affecting shipments of commodities such as wheat and exports of steel.
STX Pan Ocean, which owned 95 ships and chartered about 300 vessels, went into court receivership on June 17, in the latest blow to the debt-saddled STX Group.
“Only about half of our roughly 400 vessels remain in play, with 16 vessels arrested, 10 ships stalled due to lack of fuel, and most of the rest returned as charter contracts ended without extension,” said a STX Pan Ocean source with direct knowledge of the matter.
The source declined to be identified as he was not authorised to speak to the media.
An STX spokesman declined to comment.
STX Pan Ocean has a string of long-term contracts with iron ore companies, steel mills, power generators and flour millers.
Korean flour millers, which annually import about 2.2 million tonnes of wheat, are considering switching shippers, or asking sellers to ship wheat on a cost-and-freight basis, rather than free-on-board, said two sources with knowledge of the issue. This would mean buyers do not need to find ships,
POSCO, the world’s fifth-largest steelmaker, said it was also considering using other shippers or land routes for some of its steel exports.
Three STX Pan Ocean bulk carriers carrying 150,000 tonnes of steel products from POSCO to the United States had been seized in ports before STX filed for protection under U.S. bankruptcy laws on June 20, Korean media reported.
A POSCO spokeswoman declined to comment on the report.
Jung Tae-won, a senior manager in the wheat department at food group CJ Cheiljedang Corp, said the firm could run out of stocks if there were shipment delays.
“It would hit our production in early August, if delivery gets delayed a week more,” he said.
Korean flour millers jointly import 150,000-180,000 tonnes of wheat per month via four to six ships operated by STX, according to industry data. The millers hold about two to four months of consumable wheat in their stocks.
The loading of wheat at three STX ships - two currently at U.S. ports and one at an Australian port - due for early- and mid-June has been delayed until now, Jung said.
Millers are also concerned about July loading scheduled later this month, although Jung said he had received assurances from STX over both deliveries.
“From a long-term perspective, we may have to find other shippers or ask sellers to provide ships, if shipment delays worsen,” Jung added.
Korean millers are due to renew their three-year contract with STX this month, according to sources.
Industry data showed STX Pan Ocean holds long-term contracts worth $13 billion, including those with Brazilian mining giant Vale SA and Brazilian pulp company Fibria Celulose SA , whereas its current liabilities are estimated at $5 billion, although this is likely to rise. (Reuters)