Tuesday, February 7, 2012

Dry-Bulk Rates Follow Stock Price Rebound

Shares of commodity-tanker owners may have foreshadowed this week’s rebound in shipping costs from a quarter-century low.
     Bloomberg index of dry-bulk shipping stocks started rebounding from a record low seven weeks before the Baltic Dry Index did the same. The chart tracks the two indicators since 2008, when calculations of the stock gauge begin.
Bloomberg’s global index of 14 shippers reached a record low on Dec. 19, when the Baltic Dry Index recorded the sixth of 33 straight losses. The gauge of shipping rates sank 66 percent during the streak to 647, the lowest reading since August 1986.
     Lower transportation costs reflect an excess of tankers available to carry iron ore and other commodities rather than a decline in the amount of cargo, Polys Hajioannou, chairman and chief executive officer of Safe Bulkers Inc., said yesterday during a Bloomberg Radio interview.
     “Demand is improving, but supply does not allow the freight market to do what it usually does,” Hajioannou said. He estimated that commodity shipments are climbing by 7 percent to 8 percent annually, and added that he expects tanker rates to move higher from next year onward.
     Shares of Safe Bulkers, based in Athens, rose 18 percent through yesterday from their price when the Bloomberg index set its low. The stock gauge advanced even more, 24 percent, during the period.

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