17-05-2021 US dry bulk stocks sag as freight rates sink, while major names ready earnings, By Joe Brady, TradeWinds
A double-digit fall in capesize bulker rates did not go unnoticed — or unpunished — by US investors as shipowners in the dry-cargo trade led shipping stocks downward. Shares in US-listed bulker owners suffered an average weekly decline of 5% on Friday, as a benchmark Baltic Exchange index plunged nearly 17% on the week. That helped send the 31 stocks under coverage of investment bank Jefferies to a 1.6% decline.
The dry trade will have a chance to rebound in the current week as major owners Star Bulk Carriers and Diana Shipping report what are expected to be strong first-quarter results and guidances for second-quarter rates. Bulker names made up half the bottom 10 performers in the week past, with Eagle Bulk Shipping losing 9%. Navios Maritime Partners fell 8%, Genco Shipping & Trading dropped 7%, Diana slumped 6% and Star Bulk dipped by 5%. Shipping slightly trailed the 1.4% decline in the S&P 500, but managed a better week than the small-cap Russell 2000 index, which dropped 2.1%.
Another factor probably weighing on investors is increasing worries about inflation amid high commodity prices and supply-chain disruptions. “Even though shipping is generally a winner in an inflationary environment, it was a risk-off week across the board,” said Jefferies shipping analyst Randy Giveans. Even with the losses, the Jefferies Shipping Index is up 57.4% this year to date and 44.7% year over year.
While dry bulk shares appeared to react to the Baltic Dry Index (BDI) falling below 3,000, containership stocks dropped 4% even as the Shanghai Containerized Freight Index reached a record high of $3,343 per teu. Danaos, one of the year’s top performers to date, posted an 11% one-week decline on Friday, the worst US-listed performer. The boxship sector may get a boost this week as Israeli liner owner Zim reports its quarterly results.
“For the week ahead, we expect elevated activity in shipping as earnings season continues, the BDI is bouncing and containerships rates continue to climb,” Giveans said. Tanker shares ended Friday by eking out a 1% gain on the week as rates ticked up amid the Colonial Pipeline closure, while LNG shipping stocks slipped 1% and LPG carrier owners fell 4%.