NEW YORK (Thomson Financial) - Shares of drybulk shippers tumbled Wednesday,
extending their recent declines, after a key index measuring shipping costs for
commodities registered its biggest one-day decline since records started in
1985.
The Baltic Dry Index, managed by the Baltic Exchange in London, declined 421
points, or 5.7%, to 6,915 Wednesday. The index has declined 37% since hitting an
all-time high of 11,039 last November.
Many analysts have attributed the decline in the index to concerns about a
potential recession in the U.S., which would weigh on global growth and hurt raw
material demand.
Despite the sharp pullback in both rates and shares, CIMB analyst Raymond
Yap said fundamentals in 2008 suggest that the current weakness will reverse.
Yap said freight rates are being driven lower by a temporary reduction in
global seaborne volumes.
"During this sensitive period of price negotiations, miners are said
to be hiding or withholding exports as a means of improving their bargaining
power," the analyst wrote to clients.
Yap forecast an average of 8,000 points for the Baltic Dry Index for 2008,
up from 7,013 points in 2007. "Since freight rates are likely to be suppressed
in [the first half of 2008], the stage is set for a potentially strong rally in
[the second half] once iron ore price negotiations are completed."
Shares of Quintana Maritime Ltd. tumbled 17% to $16.21, Excel Maritime
Carriers Ltd. dropoped 5.9% to $26.42, and Dryships Inc. fell 8.8% to $50.05.
Diana Shipping fell 5.3% to $21.10 and Genco Shipping & Trading Ltd. fell
3.2% to $35.69.
Euroseas Ltd. slipped 8 cents to $9.72. Eagle Bulk Shipping Inc. dropped
4.8% to $19.30.
Danaos Corp. lost 2.2% to $23.65.
Wanfeng Zhou
wz/vj
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