By Greg Miller of FreightWaves
When dry bulk shipping rates are very high and someone tells you they’re “volatile,” it’s a euphemism for: Don’t be surprised if they fall off a cliff.
Well, they’ve fallen off a cliff. On a positive note, the climber hasn’t plunged all the way to the valley yet. He’s still clinging to the rocks partway down. U.S.-listed shares of dry bulk owners followed rates downward Tuesday — but it wasn’t just dry bulk shares, even though they suffered the largest losses. Stocks of tanker and container-ship owners also pulled back. The screen of shipping equities was a sea of red, even as the broader stock market went higher.
Dry bulk stocks
Rates for Capesizes (bulkers with capacity of around 180,000 deadweight tons) are particularly volatile because they’re beholden to Chinese iron-ore demand, which is now being curbed by cuts in steel production.
“Yells of ‘Timberrrrr’ could be heard across the Capesize market today as rates came crashing down rapidly everywhere,” said a report by London brokerage Thurlestone Shipping on Tuesday.
Clarksons Platou Securities reported that Capesize spot rates had fallen to $27,200 per day on Wednesday. On one hand, that’s still above the 2016-2020 average for this time of year of around $20,000 per day. On the other hand, 2016-2020 was a terrible half-decade for dry bulk, and current spot rates are down precipitously from a high of $87,000 per day just five weeks ago.
Dry bulk shares have logged triple-digit gains over the past year, but peaked in late September. Asked about the recent pullback in these equities, Jefferies analyst Randy Giveans told American Shipper: “Had rates not shot up...