Could Iran’s Blockade of the Strait of Hormuz Bring a Brief Windfall for HMM?

[Korea Financial Times, Shin Haeju] As concerns grow over a possible blockade of the Strait of Hormuz—which handles about 30% of global seaborne oil transport—attention is turning to whether HMM, Korea’s largest container shipping line (CEO Choi Won-hyuk), could benefit from the situation.

On June 22 (KST), Iran’s parliament approved a resolution to close the Strait of Hormuz. In response, tanker freight rates soared 30.55% week-on-week to $30,745 (about KRW 42.44 million).

In particular, the TD3C, which is the Middle East regional index within the Baltic Dirty Tanker Index (BDTI)—the leading freight rate index for crude oil tankers—has also shown an upward trend. TD3C refers to the route from the Middle East Gulf region, including the Persian Gulf, to China, based on a 270,000-ton crude oil tanker. Major oil-producing countries in this area include Iran, Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates (UAE).
In contrast, the Shanghai Containerized Freight Index (SCFI) dropped sharply, falling 10.5 percentage points week-on-week to 1,870 points as rates for North American routes declined for a second consecutive week. The Middle East is dominated by tanker traffic rather than container ships, so the SCFI is not heavily influenced by this market.

As the SCFI’s drop suggests, concerns over a Hormuz closure are not expected to have a direct impact on HMM, which mainly operates container vessels. HMM currently has only one container route passing through the Strait of Hormuz. The vessel on this route is reportedly operating on schedule. Container ships run on fixed schedules and routes.


The industry’s main concern is what happens if the Strait is actually closed. Unlike the Suez Canal, which can be bypassed by rounding the Cape of Good Hope, there is no alternative sea route for the Strait of Hormuz. If blocked, vessel movement would be impossible until the strait reopens.

However, this scenario is still somewhat removed from HMM’s core business. An industry insider noted, “It’s impossible to move 300,000 tons of crude oil by land, but for container ships, it is theoretically possible to unload standardized containers at ports and transport them by truck or rail.”
The blockade of the Strait of Hormuz has not yet become a reality. A final decision from the Supreme National Security Council (SNSC), chaired by Iranian President Masoud Pezeshkian, is required, and the approval of Supreme Leader Ali Khamenei is also necessary.

An HMM spokesperson stated, “Our container route through the Strait of Hormuz is still operating normally. If any issues arise, we are reviewing various contingency measures, including alternative ports.”

Meanwhile, HMM shares closed up 2.17% at KRW 23,500 on the day, reflecting heightened market interest in shipping stocks amid the crisis.


Shin Haeju (hjs0509@fntimes.com)