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Thursday, July 16, 2009
Dry Bulk Shipping - A summer lull?
A combination of high commodity inventories, the ongoing investigations into iron ore irregularities, and the parity between domestic and imported prices of iron ore and coal may put pressure on dry bulk rates during the summer months. Despite the more bullish steel sector fundamentals for 2H09, we worry that domestic Chinese sources of iron ore and coal may supplant imports as prices increase. As a result, we maintain our UNDERWEIGHT stance on dry bulk shipping, with weaker iron ore and coal imports in 2H09 being the key potential downside catalyst. We retain our UNDERPERFORM recommendation on all the stocks in our universe, except for TTA which we upgrade from Underperform to NEUTRAL on the basis of its cheap asset valuation. Earnings and target prices have been revised higher for all stocks except for Maybulk, as we incorporate the higher BDI forecasts.
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1 comment:
I think the dry bulk market is headed for a fall. The order book remains substantial (even allowing for cancellations). Demand will not keep up with supply in 2010. I see 2010 as the buying opportunity.
http://drybulkblog.blogspot.com/
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