Hump Day Dry Bulk

October 19, 2016

Dry Bulk Update:

 

The four indices of the BDI continue the recent pattern in that the smaller asset classes led by the Panamaxes are steadily making gains.  The largest vessels (Capes) are not doing as well.  BTW, when was last we saw Panasisters earn more than Soups?

 

Cape 4 T/C ~$10,600 down 950

Cape 5 T/C ~$11,240 down 950

BPI 4 T/C ~$7,085 up 200

BSI T/C ~$7,130 up 40

BHSI T/C ~$6,130 up 70

 

Dry FFA:

The crew at FIS tell us about the paper markets.

“Cape levels have been under pressure since early morning and posted -954 on the 4tc to 10,603/day. Expecting Pmx to be up roughly 200 as chatter is still fairly positive but the paper is off a touch as traders seem to be taking a cautious approach. Also expecting Smx/Handy to be up slightly on the tc averages, but the paper is softer on Smx. Nov contract is trading -675 on Capes, -125 on Pmx, -25 on Smx, and flat on Handy.”
 

Dry Scoop:

Our long time friend Noah Parquette of JP Morgan has reaffirmed that SBLK remains his top way to play the dry bulk space.  Noah increases his target price to $8 from $6.50.  He also maintains OW for SALT and raised the T/P to $6. 

 

Arctic Securities, the data miners led by Erik Stavseth from yesterdays report.

“Firmer sentiment in dry bulk, but softer sentiment in China – The dry bulk market is seeing a firming in sentiment with ship owners reportedly asking for ‘last done and more’ – a rare opportunity these days. According to Platts South Korean KEPCO was in the market for four coal cargoes, but apart from that the Pacific was somewhat lackluster. Atlantic activity was higher – supported by continued high loading volumes out of Brazil although the scheduled tonnage to be loaded over the next four weeks has dropped back from the high seen before the recent spike in Capesize rates. Spot earnings are still in the range of USD 10-12k/day which means at least banks are seeing some cash – but we stress that equity holders in public names like GOGL and SBLK will receive little benefit (apart from the companies’ ability to deleverage). The positive sentiment around steel seen over the past month is in retreat as steel mill margins remain negative due to higher coking coal prices and we are still on the foot where we would be cautious on dry bulk near-term.”

 

 

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