Oct. 11 (Bloomberg) – Pacific Basin Shipping Ltd., Hong Kong’s largest operator of commodity vessels, may make acquisitions in the second half of next year as a flood of new ships depresses vessel prices.

“Once that tonnage is on the water, we will see some opportunities coming up,” Chief Executive Officer Richard Hext said in a Bloomberg TV interview today in Singapore. The introduction of more vessels also means “it’s more likely that freight rates are going to go down than up,” he added.

The company has net cash of about $300 million, Hext said, after raising HK$761.8 million ($98 million) selling new shares in May to fund possible deals. Pacific Basin wants to take advantage of slumping vessel prices to expand its fleet as China’s economic growth spurs demand for iron ore and other commodities.

“For the medium to long-term, we are bullish about China because of the continued urbanization and industrialization,” Hext said. “China’s steel demand will continue to be strong, but it will be a bumpy ride along the way.”
The shipping line rose 1.1 percent to HK$5.66 at 11:19 a.m. in Hong Kong trading. It’s gained 61 percent this year.

The Baltic Dry Index, a measure of commodity-shipping costs, has more than tripled this year as China’s 4 trillion yuan ($586 billion) stimulus package spurs infrastructure spending. The index tumbled 92 percent last year on the global recession. It rose 4 percent yesterday to 2,647.

The rest of this year and into 2010 will be “very tough” for dry-bulk shipping as the expansion of the global fleet will outpace demand, Hext said.

Worldwide, shipyards have orders for bulk vessels with a combined capacity equal to 61 percent of the existing global fleet, according to data complied by Bloomberg.