RPT-UPDATE 1-China COSCO makes H1 loss, warns of tough H2

(Repeats report published on Aug. 27 to more subscribers)

* H1 loss at 4.59 bln yuan vs 4.84 bln market estimate

* Warns of difficult H2 on lower demand, higher supply

* HK shares jumped 88 percent this yr outperforms market (Adds analyst comments and details)

By Alison Leung and Fang Yan

SHANGHAI/HONGKONG, Aug 27 (Reuters) - China COSCO Holdings (1919.HK), the country's largest shipping group, swung to a slightly smaller-than-expected net loss in the first half, and warned of a still tough second-half amid continuous decline of economy and trade.

"In the face of the significant over-supply and re-surging oil prices, it is expected that the operational conditions for the second half of the year will remain difficult," the company said on Thursday.

Analysts have said the freight market has begun to recover but the pace of a shipping industry upturn is likely to be slower than recovery of the world economy considering the long order books for new ships.

Drewry Shipping Consultants estimated global container volume to fall by 10.3 percent in 2009 and global container fleet capacity is expected to grow by more than 10 percent this year, China COSCO said.

China COSCO (601919.SS), which warned of a first-half net loss in July, reported a net loss of 4.59 billion yuan in Jan-June as the global recession took a toll on international trade, which badly hit sea transport volumes and rates.

The result was slightly better than a consensus forecast of 4.84 billion yuan loss from four analysts polled by Reuters and compared to a profit of 15.12 billion yuan a year ago.

Total revenue plunged nearly 60 percent to 28.9 billion yuan from 70.57 billion yuan a year ago.

For result statement please click here

China Shipping Container Lines (2866.HK) (CSCL), which vies with China COSCO as the world's sixth-l-half loss on Thursday.

To read CSCL results please click here

NARROWER LOSS

"There have been some improvements seen in the freight rates and China COSCO is expected to see a smaller loss in the second half than the first six months," said Geoffrey Cheng, an analyst at Daiwa Securities.

But the Baltic Exchange's dry sea freight index .BADI (BDI) peaked for the year in June and a continual downtrend could require the company to make further provisions ahead, he added.

The BDI, which tracks prices to ship commodities such as iron ore and grains, jumped more than six fold to a high of 4,291 in June from a low of 663 points last December.

The index stood at 2,425 points on Thursday or just about one-fifth of its peak of 11,793 in May 2008.

China COSCO, which operates the world largest dry bulk fleet, shipped 4.8 percent less dry bulk cargoes, or 129.3 million tonnes, in the first six months, it said.

Chinese shipping firms have also been badly hit due to wilting demand for made-in-China goods from European and U.S. consumers.

China COSCO's container volume dropped 22 percent to 2.35 million twenty-foot-equivalent units (TEU) in the first half.

Shares of China COSCO ended down 3 percent in Hong Kong on Thursday, but have risen 88 percent so far this year, beating a 41 percent gain in the benchmark Hang Seng Index .HSI.

China COSCO's Shanghai shares have also increased 91 percent year to date. (Additional reporting by Jacqueline Wong; Editing by Anshuman Daga and Jon Loades-Carter)