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
the biggest customer for ships used to haul iron ore, coal and other
commodities, he said. 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
and Shanghai-based China Shipping Development to ‘buy’ from ‘sell’ in a Jan. 18
note. Pacific Basin has gained 13 % since the
close of trading the day before the note, while China Shipping Development has
jumped 22%. 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
and acceleration of vessel deliveries, Ross said. Steel mills and other Chinese
factories close for at least a week around the Lunar New Year holidays, which
started Jan. 23. 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 firstname.lastname@example.org
Source: Bloomberg Business Week. By Jasmine Wang. 26 January 2012