Market Realist publishes weekly developments in critical dry bulk shipping performance indicators. Analysts, industry consultants, investment managers, financial advisers, finance students, and retail investors follow these indicators to get a picture of how the industry is performing as well as how these indicators may affect fundamentals over the next few weeks, months, or years. Each recap begins with an overview of the primary events that affected share prices in the prior week and then analyzes key updates on these indicators that are important to fundamental performance.
Last week (August 12 to 16), we saw U.S. markets—S&P 500, Dow Jones, and Nasdaq—fall on caution that the Federal Reserve (the central bank) will begin tapering bond purchases in September, as there may just be enough positive economic data to support the warning. Dry bulk shipping companies such as Navios Maritime Partners LP (NMM), Navios Maritime Holdings Inc. (NM), Diana Shipping Inc. (DSX), DryShips Inc. (DRYS) and Safe Bulkers Inc. (SB), however, rose when U.S. markets fell more than 1%. Higher Capesize vessel rates, likely due higher iron ore trade volume, were the key driver for higher share prices.
Critical indicators update
From a fundamental standpoint, we continue to see a positive trend in China’s demand for dry bulk shipping, as prices for imported iron ore and steel continue to rise, and low iron ore inventory in China continues to support continuous growth in iron ore trade. Although year-over-year steel production growth fell, analysts expect the drop to be temporarily. Ship construction activity is coming down, and we continue to see managers placing orders for new ships. While capacity growth remains a bit elevated, rates are more or less stable, and the industry appears to be turning around. At least the worst is likely over.
Read on to explore the critical indicators in more detail.