Despite the reduced expectations likely increasing the losses facing
leading owners in the sector, the bank does offer some hope suggesting the
outlook for the market is favourable for the first time in half a decade.
Doug Mavrinac, an analyst at Jefferies, has cut his 2013 capesize rate
forecast by one third to $12,000 daily.
In a report issued today his panamax and supramax bets have also been hauled
down from $14,000 to $8,000 daily.
“We are reducing our 2013 EPS estimates as dry bulk shipping spot
charter rates entered 2013 at lower levels than anticipated, but, we still
expect charter rates to improve in 2013 as dry bulk shipping demand should
remain strong in 2013 as Chinese import demand for both iron ore and coal
remains firm while dry bulk shipyard deliveries continue to slow materially,”
Mavrinac said.
His revised 2013 numbers mean Baltic Shipping & Trading’s return to
profit will be delayed, with it now forecast to post a $0.72 per share loss.
Deeper reversals are also anticipated for DryShips, Diana Shipping, Eagle
Bulk and Genco, the report suggests.
The analyst says this year marginal demand growth will likely exceed
marginal supply growth for the first time since 2008, "an outlook
that suggests a favorable forward operating environment for the first time
since 2007”.
But rates will remain volatile this year, particularly in the first half.
“In fact, even during the shortened time period spanning
1H13, we would not be surprised at all if dry bulk shipping spot charter rates began
to surge in February after the Chinese New Year as steel mills return to the
iron ore import market followed-up by a seasonal surge in March/April as a
result of an expected robust grain export season in South America only to be
followed up by a seasonal slowdown during the summer months which could take
dry bulk shipping spot charter rates back lower,” he said.
Moving into 2014 Mavrinac’s numbers make better reading with capesize
earnings charted to climb to $20,000 daily.
Panamaxes and supramaxes are pencilled in at $14,000 daily each.
He added: “We believe longer-term market sentiment should start to firm
as well during 2H13 as 2014 approaches with net fleet growth for 2014 likely to
be smallest since 2003 at only 2-3%.”
His 2014 rate forecasts project a return to profit of both Baltic and
DryShips, the report says.
Mavrinac said: “While
visibility for the global economy, Chinese economy, and dry bulk trade is murky
at best for 2014, we believe the dry bulk trade should continue to expand with
China’s continued urbanization and industrialization efforts.
“In
fact, we believe the dry bulk trade could receive a boost in 2014 from the
second largest iron ore importer in the world, Japan, as that country begins to
increase investment in infrastructure as part of a $226bn stimulus program to
be launched later this year.”
