Hong Kong: UOB Kay Hian Securities yesterday urged investors to dispose of dry bulk shares including China COSCO and China Shipping Development, as both companies’ dry bulk fleets were mostly ordered during the high market of 2007-08 and it doesn’t expect the market to recover before 2014.
“It is quite clear that the drybulk shipping sector is still going through a deep downcycle. China’s iron ore imports would be depressed by the recent iron ore price rally in 1H13, and a 13.6% and 11% fleet growth creates massive surplus capacity. We hardly foresee any significant upward catalyst in fundamentals until excessive capacity is absorbed in end-2014,” said UOB analyst Lawrence Li.
“Based on current spot rates and our bearish sector outlook, we expect most operators will continue to struggle in 2013 in terms of profitability. Self-owned Capesize and Panamax bulk carriers are very likely to book losses throughout 2013 while profitability of chartered-in vessels highly depends on the timing of chartering. Handy operators will still have a relatively good year in 2013,” said Li. [18/01/13]
