Here Is Why Dry Shipping Stocks Made An Across The Board Huge Splash
Here is something I literally don’t see every day and in fact, I can’t even remember the last time I did. The Baltic Dry Index was actually red yesterday, February 3rd, yet every single dry shipping stock on my radar list was up at least 5% with most of them much higher. While there was no fundamental news on an individual level that justified the rocket moves from Diana Shipping (NYSE:DSX), DryShips (NASDAQ:DRYS), Navios Maritime Partners (NYSE:NMM), Safe Bulkers (NYSE:SB), Star Bulk Carriers (NASDAQ:SBLK), Baltic Trading Limited (NYSE:BALT), Knightsbridge (NASDAQ:VLCCF), and Navios Maritime Holdings (NYSE:NM) it was a shockingly positive report that came out about January.
According to a report by Bloomberg, over 30.2 million tons of iron ore were shipped from one of Australia’s biggest bulk export terminal for the month of January. This was close to the 30.6 million tons for December but over 29% than January of last year.
What this data suggests is two things: First, December is traditionally one of the seasonally strongest months by far for iron ore shipments and dry shipping in general while January is generally one of the weakest due to the Chinese holiday. That makes the January data even bigger than meets the eye. Second, for January to even compare to December, it puts some serious doubt in the theories that Chinese demand for iron ore is softening. Yes, dry shipping rates are still weak due to an extreme glut of shipping supply but that shipping supply only exists based on expectation of demand increases. This is the first sign that maybe, just maybe, that demand is still coming.
Shipments from Brazil continued to follow the seasonal patterns and are also playing into weak rates. Trips from Brazil to China use up about three times the shipping supply as trips from Australia but at least the demand was clearly higher for the metal itself. That’s a first step toward a possible shipping rate recovery.
Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.