Drybulk shipping stocks soared Wednesday amid a rebound in the broader market, as a key shipping index leaped and investors cheered a possible Chinese stimulus package in the hopes it would boost manufacturing and infrastructure spending.
The Baltic Dry Index, which is run by the Baltic Exchange in London, rose 50 points Wednesday to close at 2,084. The index measures shipping rates on 40 routes throughout the world.
Omar Nokta, an analyst with Dahlman Rose & Co., said in a client note that the sector's largest vessels, Capesize, are underperforming other ships because the stream of iron ore shipments into Australia are still disrupted due to bad weather.
Nokta said activity should remain low in the next few days as steel prices continue to weaken in China and iron ore price negotiations stall.
Transports of iron ore and steel to and from Australia and China are the major uses for Capesize vessels, which are so named because they are too big to fit through the world's canals, and must instead navigate the Cape of Good Hope or Cape Horn to travel between oceans.
Rates for Panamax vessels - the largest drybulk ships that can fit through the locks of the Panama Canal - continue to be strong, jumping 30 percent this week, he said.
Earlier Wednesday, Diana Shipping Inc. said it signed a time charter deal for one of its Panamax vessels with TPC Korea Co., Ltd., which makes auto parts and other steel products.
The contract is for 11 to 13 months and expected to produce $4.6 million in revenue for Diana.
In afternoon trading, shares of Diana gained $1.49, or 14 percent, to $12.15. DryShips Inc. soared 98 cents, or 35.1 percent, to $3.77. Eagle Bulk Shipping Inc. jumped $1.15, or 38.5 percent, to $4.11.
http://www.forbes.com/feeds/ap/2009/03/04/ap6126226.html
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