Shippers of raw commodities such as DryShips Inc. (DRYS) and Genco Shipping & Trading Ltd. (GNK) rose as rates to ship raw commodities posted their biggest one-day gain since at least 1985 on increased Chinese demand.
DryShips gained $1.07, or 18 percent, to $7.16 in Nasdaq Stock Market composite trading. Genco rose $3.37, or 22 percent, to $18.72 in New York Stock Exchange composite trading. It was Genco’s largest percentage gain since the company went public in July 2005.
The Baltic Dry Index advanced 168 points, or 15 percent, to 1,316. The gauge, a measure of shipping costs for commodities, has risen 70 percent in 2009, its best start to a year since Bloomberg began keeping data in 1986. It fell as low as 663 on Dec. 5. The index is down 79 percent from a year ago. Rates fell 92 percent in 2008 as Chinese demand for iron ore fell and financing to buy cargoes dried up.
“The dry-bulk market (is) showing signs of life,” Urs Dur, an analyst at Lazard Capital Markets in New York, said in a note today. “Chinese iron-ore inventories are declining, Chinese steel prices are rising, Australian iron-ore exports are at their highest levels since mid-2008.”
Eagle Bulk Shipping Inc. (EGLE) added $1.71, or 31 percent, to $7.19, its biggest gain since Dec. 9. Diana Shipping Inc. (DSX) rose $1.51, or 11 percent, to $15. Excel Maritime Carriers Ltd. (EXM) was up $1.71, or 27 percent, to $7.98, its largest gain since Dec. 9.
China, the world’s biggest steelmaker, announced in November a 4 trillion-yuan ($590 billion) stimulus package running through 2010. The plan includes $292 billion for expansion of railroads with one-third of the total funding due to reach projects by the end of March, Genco Chief Financial Officer John Wobensmith said Jan. 27.
Cash prices for iron ore imported by China gained for the first time in a month on Jan. 12 on speculation the nation’s stimulus package will spur construction demand. Spot prices are within 15 percent of last year’s contract pricing, BHP Billiton Ltd. Chief Executive Officer Marius Kloppers said yesterday.
“I’m not sure it’s sustainable,” said Natasha Boyden, an analyst at Cantor Fitzgerald LP in New York. She saw the demand as necessary for “restocking of inventories” rather than a trend.
“There’s still some Capes to come back into the market,” she said. Wobensmith last week said 30 to 35 Capesizes were laid up because of a lack of business.
Rates to hire Capesizes, the largest commodity carriers, rose 17 percent to $21,810 per day. Daily Panamax-class ship rates gained 14 percent to $8,005. That rate has gained for 12 consecutive days. Panamaxes usually haul 75,000-ton cargoes and are the largest ships able to travel through the Panama Canal.
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