Michael Webber says the deals reflect a strategic long-term investment that won’t pay off for another two years and doesn’t believe they are a signal that “today’s equities are poised to substantially improve”.
“While the [dry-bulk] group certainly remains volatile, we do not believe we are seeing the start of a sustainable recovery, rather a short-term trade,” the equity analyst told clients in a research note Tuesday.
“We continue to see significant oversupply issues, and note the Fredriksen orders, while a bullish signal, capitalize on cheap assets with a 25-year life ($46m for capesizes, a nine-year low) with 2015 delivery dates, in our view.”
Webber noted that last week’s gains, which saw US-listed bulker stocks climb 28% on average, were also a reflection of positive sentiment surrounding Chinese growth, Beijing’s easing of the nation’s monetary policy and strong iron ore prices that are taking shape in anticipation of restocking.
Today, the Baltic Dry Index (BDI) rose 3.1% to end the day at 734 as daily rates for capesizes, panamaxes and supramaxes trading in the spot market climbed 12.2%, 1.9% and 0.9% to $6,157, $5,401 and $7,736, respectively, according to analysts at Dahlman Rose.
The US investment bank, which pointed out that levels are still relatively low and in many cases below vessel operating expenses, said the same classes of bulkers were earning $13,386, $11,602 and $11,300 per day on average 12 months ago.
