It has been a dire start of the decade for the dry bulk sector, especially for capesizes.
The Baltic Dry Index (BDI) has dropped by 50.5% since the start of the year to close on 539 points yesterday.
Researchers at brokers Intermodal noted in their most recent weekly report: “Among all vessel sizes, Capesize suffered the biggest losses putting an end to last week’s hopes for a more stable and eventually positive market. We hope that once trading in the East resumes fully in the following days, a potential generous injection of fresh cargoes could lead the market to healthier levels, while as bunker prices eventually start coming off their highs sentiment is also bound to improve slowly.”
Intermodal described the capesize market as a “nightmare” for owners, with average time charter earnings dropping more than 42% compared to the week prior. Rates in the Atlantic witnessed the biggest discounts, while in the Pacific public holidays impeded rate improvements.
The poor sentiment has been matched in the S&P domain with data from VesselsValue showing total bulker spending this month, like the BDI, is down by 50% year-on-year, making it the slackest January for eight years.
John Michael Radziwill’s GoodBulk has been widely tipped as making the first cape sale of the 2020s, picking up $18m for the 2011-built Aquacarrier. Radziwill declined to comment when contacted by Splash on the sale rumours.
Despite the BDI’s dire start to the year, which historically does often happen for this sector between Christmas and Chinese New Year, the world’s top shipping analyst today upgraded the sector to a buy.
Joakim Hannisdahl from Cleaves Securities, crowned the world’s top shipping analyst according to bank rankings carried by financial newswire Bloomberg last November, today issued a 107-page report on the dry bulk sector issuing an upgrade due to the recent rout in shares.
“Although the near-term direction is uncertain, we do see our share index +50% in 1y & +121% in 2y against one of the longest expansionary cycles since the 1740s,” Hannisdahl wrote. Cleaves’ top pick today was Star Bulk. Cleaves’ dry bulk recommendations have returned 57% since 2015 versus the market at -66% and consensus at -76%.
The Capesize Index is now hovering close to levels that historically have signified a bottom.#shipping #drybulk $BDRY pic.twitter.com/VNNEXKsRwg
— BreakWave (@DryBulkETF) January 28, 2020
