How’s the dry bulk shipping industry performing?
The Guggenheim Shipping ETF (SEA) is an index weighted with dry bulk shipping companies. So far in 2015, SEA has lost 6.5%. Major players in the dry bulk shipping space have taken a hard fall this year. DryShips (DRYS), Navios Maritime Holdings (NM), Navios Maritime Partners (NMM), and Safe Bulkers (SB) fell 55.6%, 17.8%, 8.5%, and 16.2%, respectively. Diana Shipping (DSX), on the other hand, rose 7.7%. Navios Maritime Holdings (NM) forms 2.2% of SEA’s holdings.
Factors driving dry bulk shipping
On the commodity side, iron ore and coal form almost two-thirds of the dry bulk shipping industry. China is the largest consumer of these two commodities. These are the major drivers on the demand side.
The supply side of dry bulk shipping got a major boost almost eight years ago with China’s (FXI) increasing appetite for iron ore and coal. So managers placed large ship orders. This is driving the current oversupply in the market amid waning demand growth from China.
In this series, we’ll be looking at key differences in terms of fleet type and fleet age. We’ll look at spot versus fixed exposure, financial and operating leverage, future plans, and the valuations for the five companies mentioned above. This will help investors understand which companies could outperform based on these factors in the current weak operating environment of the dry bulk market.
In the next part, we’ll take a look at the fleet profiles for dry bulkers.