SEOUL, April 26 (Yonhap) — Shares in South Korea’s leading shipbuilders and shippers shot up on Monday as the sector is positioned to fare better in the months to come on an economic recovery.

Korea Shipbuilding & Offshore Engineering Co. (KSOE) closed up 6.74 percent at 150,500 won (US$135) on the Seoul bourse.

KSOE’s holding company Hyundai Heavy Industries Holdings Co. rose 8.52 percent to close at 63,700 won, with Hyundai Mipo Dockyard Co., a KOSE unit, soaring 9.28 percent to end at 73,000 won.

Daewoo Shipbuilding & Marine Engineering Co. spiked up 6.71 percent to 31,000 won, while Samsung Heavy Industries Co. shot up 4.21 percent to close at 7,420 won.

Along with shipbuilders, local shippers staged a rally on hopes for increased shipping costs.

HMM Co., the country’s largest shipper, saw its shares rise 9.71 percent to 36,150 won, with top bulk carrier Pan Ocean Co. jumping 6.14 percent to 7,430 won.

Industry watchers said the stock rally was attributable to hopes for a quicker than expected economic recovery from the COVID-19 pandemic, which boosted demand for ships and shipping.

“Shippers did not invest in container carriers due to an economic slump that lasted for three years since 2018. The supply shortage has been pushing up freight rates,” Choe Jin-myung, an analyst at NH Investment & Securities, said by phone.

The Shanghai Containerized Freight Index (SCFI), a barometer of global freight rates, came to 2,979.76 points on Friday, the highest since 2,885 points on Jan. 15, 2009.

“Increasing shipping rates will cause shippers to put more orders for container carriers, so shipbuilders will benefit from such moves,” Choe added.

The recent demand for shipping will not be met for the time being as ships ordered this year could be delivered sometime in 2023, he added.

An index for commodity shipping costs showed the recovery of bulk carriers’ business.

The Baltic Dry Index (BDI), a measurement of shipping costs for commodities, came to 2,788 on Friday, the highest level in 10 years since September 2010.

Park Sung-bon, an analyst with Hana Financial Investment Co., said in a report that Pan Ocean is expected to stage strong performance in the second quarter on the back of an unexpected rise in the BDI.

Increased global prices of iron ore and setbacks in cargo-working caused by the COVID-19 pandemic pushed up commodities shipping costs unexpectedly, Park added.

A rise in shipping costs and raw materials pushed up prices of ships, which will have a positive impact on shares in shipbuilders, said Lee Dong-heon, an analyst at Daeshin Securities Co., in a report.