The possibility of Chinese property developer Evergrande defaulting on its debt shook global markets earlier this week, but shipping analysts have taken the news in stride. The Shenzhen-based real-estate behemoth in recent weeks revealed that it was struggling with $300bn in debt, including an $83.5m interest payment due on Thursday. Fears over Evergrande coming up short caused financial indices and equities worldwide, including those in shipping, to tumble by as much as 20% on Monday. Some analysts speculated that the debt dilemma may trigger a global recession, similar to the 2008 financial crisis that followed the fall of Lehman Brothers, but markets bounced back on Tuesday. Most dry-bulk shipping equities were up at the outset of Wednesday’s trading on Wall Street, led by Globus Maritime shares gaining 7.4% to $3.05.

The Dow Jones Industrial Average gained 185.66 out of the gate to reach 34,105.50. “I know the world likes to sensationalize everything, but to compare the Evergrande debt situation with the global financial crisis is a massive overreaction,” Jefferies analyst Randy Giveans told TradeWinds. “Certainly, a topic and issue to keep an eye on, but not very worried.” He said China’s government will most likely force Evergrande’s competitors to take over some properties while supporting the housing market with real estate-related policies and monetary easing. “Given traditionally tight lending standards such as a general prohibition of second house mortgages and high down payments, we expect a price correction that could trigger a full-on financial crisis as a highly unlikely scenario,” he said. Shipping should therefore remain unscathed by Evergrande’s financial troubles, especially since the industry is doing quite well amid tight supply and high demand, he said. “The supply picture remains very attractive with low orderbooks and old average fleet ages,” he said. “Company balance sheets — especially on dry bulk and containerships — are at the strongest levels arguably ever, thus easier to withstand any short-term market volatility.”

Shipping should remain stable despite uncertainties around Evergrande and factors such as the US debt ceiling and infrastructure legislation, Noble Capital Markets analyst Poe Fratt said. “I do believe that the dry bulk stocks will recover, possibly in response to third-quarter 2021 operating results,” he told TradeWinds. “At this point, I don’t see the fundamentals changing. Maybe demand will ebb as we enter the new year with less congestion and lower steel production, but the supply side appears very supportive of continued attractive fundamentals.”

The capesize 5TC, a spot-rate average weighted across five key routes, continued its upward swing on Wednesday amid strong iron-ore demand, jumping 6.1% to $59,715 per day. Spot rates for dry bulk shipping’s other asset classes also maintained positive momentum to a lesser degree as the demand for grain and coal remained high. The panamax 5TC picked up $274 per day to come in at $35,647 per day, while the supramax 10TC added $118 per day to hit $36,717 per day, according to Baltic Exchange assessments. The handysize 7TC also gained ground, picking up $278 per day to reach $34,215 per day.