DryShips Inc (fka DRYS)

[eastunder]

Dry-Bulk Rates to Recover in 2010: CEO
http://www.thestreet.com/print/story/10663163.html

Scott Eden
01/19/10 - 12:13 PM EST (I was out of town so posted late)

NEW YORK (TheStreet) -- A top executive at Cosco Holdings, the huge Chinese dry-bulk shipping company, predicted that his industry would see something of a recovery in shipping rates in 2010, but warned that the market would remain volatile.

In remarks to reporters in Hong Kong Tuesday, Cosco President Zhang Liang said he expects the Baltic Dry Index, a measure of dry-bulk shipping rates across vessel sizes, to move between a range of 3,000 and 4,000 on average during 2010, according to Bloomberg.

That would be in line with present levels. Tuesday's reading of the BDI was 3,208, down 2.6% from the previous day -- a decline that comes after a brief strengthening trend last week.

The average going rate for a capesize vessel, the largest type of bulk carrier in the world, fell to $40,100 a day on Tuesday, down $2,500 from Monday.

Volatility has been a hallmark of the industry even before the financial crisis and recession. After reaching record highs in 2008, dry-bulk rates crashed to record lows in the late winter of 2009, only to recover sharply in the fall. Largely driven by China's thirst for raw materials, and the vicissitudes in its buying trends, bulk shippers saw capesize rates surmount $80,000 a day in October only to fall back again as China eased back on the importing throttle.

Cosco's Zhang warned about the number of freshly built ships scheduled to come into service this year, which could weigh on rates. "We are still facing huge pressure this year because of oversupply of new ships, iron-ore talks and fuel costs," Bloomberg quoted Zhang as saying. He also indicated that Cosco, for one, will delay the vessel deliveries it has scheduled for 2010.

U.S.-listed dry-bulk shares have also performed with volatility of late. Some of the better-known names in the sector -- DryShips(DRYS Quote), Diana Shipping(DSX Quote), Genco Shipping & Trading(GNK Quote) and Eagle Bulk Shipping(EGLE Quote) -- saw their share prices decline through last week.

On Tuesday, dry-bulk stock were mixed. Among the larger-cap names, Diana shares led the decliners, losing 2% to $15.76. DryShips, Genco and Excel Maritime(EXM Quote) were all lower by less than 1%, while Eagle Bulk was gaining 0.9% to $5.62.

-- Written by Scott Eden in New York