Jan. 26 (Bloomberg) -- Pacific Basin Shipping Ltd.,
Hong Kong ’s biggest operator of commodity
vessels, rose to the highest in 3 months on speculation an increase in vessel
scrapping may spur a recovery in rates.
The carrier climbed as much as 6.9% to HK$3.90 in Hong Kong trading, the highest intraday price since Oct.
17. It was up 3.6 percent at HK$3.78 as of the midday trading break. China
Shipping Development Co Ltd., part of the nation’s second- largest shipping
group, advanced for a fifth day, jumping as much as 9.1%.
Dry-bulk operators may accelerate ship-scrapping
this year after a global glut helped push the Baltic Dry Index, a benchmark for
rates, to the lowest in three years, according to Samsung Securities Co.
analyst Timothy Ross. Rates may also rebound following the end of this week’s
Lunar New Year holidays in China
“Expectations of an index recovery on a rebound in
demand post the Chinese New Year and a scrapping-led moderation in supply have
encouraged investors to take risks on high beta stocks like the dry-bulk
sector,” he said.
Ross raised his ratings on Pacific Basin Pacific Basin
The Baltic Dry Index has fallen 52% this
year to 784 because of the Chinese holidays, poor weather in export markets
such as Australia
The index may rebound to 2,000 by the
beginning of the second half of the year as declining rates, rising fuel costs
and scrap metal prices at a decade-high may prompt shipowners to retire
vessels, Ross said in the Jan. 18 note. About 25% of the global dry-bulk fleet
is also more than 20 years old, he said.
--Editors: Neil Denslow, Garry Smith
To contact the reporter on this story: Jasmine Wang
in Hong Kong at Jwang513@bloomberg.net
To contact the editor responsible for this story:
Neil Denslow at ndenslow@bloomberg.net
Source: Bloomberg Business Week. By Jasmine Wang. 26 January 2012
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