US-listed shipping stocks are continuing to stay relatively buoyant amid a broader market sinking around them, but the performance was dampened by a sharp reversal in the tanker sector last week.
The 29 names under coverage of investment bank Jefferies once again logged a weekly gain, though just barely at 0.5% on the week, with about equal numbers of winners and losers.
This was still easily better than the 2.9% loss in the S&P 500 and 1.1% drop in the small-cap Russell 2000 index as investors continued to baulk at the impact of Russia’s war on Ukraine, inflationary pressure and soaring energy costs.
The Jefferies Shipping Index is up 21.5% year to date and 43.1% year over year.
The main damper for the group on the week was tanker stocks, as crude carrier rates fell backwards as quickly as they’d jumped up at the outset of the Ukraine crisis.
Tanker owners dipped 10% as VLCC rates plunged 172% on the week, with suezmaxes and aframaxes down double digits. Meanwhile, product tanker rates are approaching two-year highs on record refining margins.
The week's biggest losers were major owners of crude tankers: Tsakos Energy Navigation at 19.5%, Frontline at 12.3%, Nordic American Tankers at 11%, DHT Holdings at 10% and Teekay Tankers at 8.3%.
“TEN got caught up in the tanker rally, then gave back ground as rates fell,” said Jefferies lead shipping analyst Randy Giveans, while also noting that the Greek owner has yet to report quarterly earnings.
"Frontline was a big winner with the tanker hype and rates surging, but as rates and sentiment fell, the stock did as well."
Still, tanker owners' losses were dry bulk owners' gains, as that sector gained an average 6%, helped substantially by Black Sea disruption.
“Average capesize spot rates surged 64% on the week as European traders source coal and other dry bulk commodities from further-away distances to replace lost Russian supplies,” Giveans said.
There were also increased shipments of iron ore from Brazil following the Lunar New Year break and weather disruptions, the analyst said.
Connecticut-based Eagle Bulk Shipping was a major beneficiary on the week with a 19% gain. While it does not own capesizes, its large fleet of supramaxes and ultramaxes has the greatest exposure to expanded grain and coal tonne miles for European deliveries, Giveans said.
Container ships also gained 6% on strong rates, helped by Israeli liner operator Zim, which jumped 10% after it reported an unexpectedly high dividend for 2021 and a strong 2022 guidance.
