Analysts at Clarksons Platou Securities have questioned the reversal seen in dry cargo stocks this year at a time the market is improving and asset prices are expected to climb further.
Bulker equities are down by 3% in the year to date as part of a wider 7.7% fall in shipping stocks during the early weeks of 2018.

Herman Hildan, Frode Morkedal and Jon Gandolfo say that falls in the share price of public dry cargo owners this year are challenging to explain at a time they have boosted their rate forecasts.
“Sector fundamentals and investor valuation have shown a rather irrational negative correlation,” they wrote in their latest quarterly report today.

The trio point to the one-year time charter rate for a capesize bulker being up 18% in the past few months, while the a 10-year-old cape has appreciated by around 12% to $23.5m over the same period.
“A $2.5m value uplift on a vessel with 40-70% leverage gives +20-40% equity return, a sharp contrast to average -6% for dry bulk equities since our last report,” the analysts wrote.

“Furthermore, historical correlations suggest a further 25-30% potential upside for the 10 year old value based on current one-year year charter rates.”

Shipping shares climbed in 2017 for the first time since 2013, with equities up by an average of 11%.

This year’s 7.7% fall in shipping shares is led by an 18% decline in crude tanker stocks, the analysts explain.

The analysts positive thoughts around dry bulk was backed up by improved freight rate forecasts.

Hildan, Morkedal and Gandolfo are now charting for capesize spot rates of $19,000 per day in 2018, rising to $24,000 per day in 2019 and $25,000 per day in 2020.

Previously the analysts had projected $14,500 per day for capes this year and $18,500 per day in 2019. Their forecasts for panamax and supramax bulkers were also increased.