Danske boosts GOGL

Expectation surrounding a strengthening of the dry cargo market has led Danske Bank to boost its rating on John Fredriksen’s Golden Ocean.

Analyst Bjorn Kristian Roed has lifted the Oslo-listed bulker owner from sell to buy.

Roed explains the upgrade comes amid projections a “strong rate environment is lying ahead of us” as Brazilian exports combine with slowing supply growth and iron ore arbitrage.

He says Vale has been holding back cargoes during the first quarter, which will boost capes as the ore is released.

Major capacity increases in Australia are also on the horizon, which will further spur capesize demand, the analyst argues.

Roed, who says the bulker market is on the cusp of a strong rate environment, also points to an iron ore price arbitrage between China’s domestic resources and cargoes from Australia and Brazil.

“This is very import sensitive, and should, in line with history, again spur capesize rates in the short to medium-term, aiding strong momentum in dry bulk shares like Golden Ocean," he wrote in a report today.

Panamax earnings are tipped to follow the capes' lead helped by grain cargoes out of the Atlantic and low coal inventories in China, Roed says.