Drybulk index posts largest-ever 1 day drop
Thursday June 12, 1:32 pm ET
By Samantha Bomkamp, AP Business Writer
Key drybulk index posts largest-ever 1 day drop as demand sinks for largest drybulk vessels
NEW YORK (AP) -- A key shipping index measuring drybulk vessel activity posted its largest one-day drop Thursday, dragged down as rates for the sector's biggest ships lost significant ground.
The Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world, sank 963 points Thursday to reach 10,142. The index had wavered, but remained above 11,000, since hitting an all-time high on May 20 of 11,793. The index, managed by the Baltic Exchange in London, had previously posted its biggest one-day skid of 443 points on Jan. 17.
The index's reading for Capesize vessels -- the largest drybulk carriers -- fell 16 percent. The average Capesize vessel now costs about $180,000 per day, compared with prices of more than $230,000 per day last week. Capesize vessels are so named because they are too big to fit through the Suez or Panama canals, and must instead sail around the Cape of Good Hope or Cape Horn to travel between oceans.
Cantor Fitzgerald analyst Natasha Boyden said in an interview the significant drop was the result of Chinese iron ore importers working through their stock piles of the commodity instead of bringing more into the country. With the huge demand for iron ore, steel and other commodities carried by drybulk ships soaring, Boyden said Chinese importers turned to their own supplies as ports clogged and drybulk rates skyrocketed.
But Fitzgerald noted that the Chinese only have about three to four weeks worth of iron ore stockpiled. After its resources are used up, Boyden said drybulk ships will again be in high demand to deliver goods to the country.
"This (pull back) is merely temporary," she said. "Painful, but temporary."
Investors sent shares down across the sector as they reacted to slowing market activity. In midday trading, shares of DryShips Inc. fell $5.14, or 6.6 percent, to $72.30. Navios Maritime Inc. lost 15 cents to $9.64, while Danaos Corp. gave up 49 cents, or 2.1 percent, to $23.04.
Genco Shipping and Trading Ltd. sank $4.13, or 7.2 percent, to $53.23. Diana Shipping Inc. pulled back $1.10, or 3.7 percent, to $29.07.
Excel Maritime Carriers Ltd. retreated $3.06, or 7.5 percent, to $37.75, and Eagle Bulk Shipping Inc. slipped $2.03, or 7 percent, to $26.50.
Euroseas Ltd. fell 9 cents to $13.10.
