Covid-19 has indeed caused numerous supply chaos in various sectors. Counting from global supply chain breakdowns, increased shipping costs, clogged ports, empty store shelves, to rising inflation, the pandemic has left many suppliers and consumers desperate not knowing what to expect next. This has been triggered, especially by the new delta variant.
This, however, does not mean that all shipping suppliers are facing hard times. For instance, after the summer season, bulker owners, container lines, container-ship lessors, and liquefied natural gas (LNG) carriers’ shares are rising to hit new peaks. However, those heavily exposed to the new delta variant, including stocks of crude and product tanker owners, are yet to join the list.
Big Week for Dry Bulk Shipping Stocks
Three dry bulk shipping stocks- Safe Bulkers (NYSE: SB), Diana Shipping (NYSE: DSX), and Genco Shipping and Trading (NYSE: GNK)- have experienced enticing achievements in this week's statistics. Their shares have attained 52-week highs on Monday. Other dry bulk shipping stocks are also close to annual tops. For example, the Breakwave Dry Bulk Shipping ETF (NYSE: BDRY), which is an exchange-traded fund that purchases freight futures, traded at the highest level on Monday since the ETF's inception in March 2018.
Capsizes' rates (bulkers with a capacity of around 180,000 deadweight tons or DWT) surged 15% on Monday to $52,900 per day. Those for Panamaxes (65,000 to 90,000 DWT) reached at around $34,4000 per day while rates for Supramaxes (45,000 to 60,000 DWT) flowed to around $34,900 per day. However, these rates are still not close to the pinnacles reached in 2007-2008 trading.
With the shares of Safe Bulkers rising 17% in five times the average trading volume on Monday, the statistics show that shares of dry bulk stocks have risen by around 200-400% over the past year. This growth outpaces container stocks in several scenarios.
Container Stocks Hit Highs in September
Container-ship lessor Euroseas (NASDAQ: ESEA) reached its 52-week peak on Monday this week. This happens after most container stocks withdrew due to low single digits during the trading session. Other container stock entities that hit 52-week this month include Global Ship Lease (NYSE: GSL) and Costamare (NYSE: CMRE) on Friday, ZIM (NYSE: ZIM) and Matson (NYSE: MATX) on September 6, and Danaos (NYSE: DAC) the week before that.
Most container liner and ship-lessor stocks rise by around 100-400% over the past year. Danaos (1,508%) and Euroseas (1,204%) were the leading during the trading period.
Not the Same Case for Tankers
Covid-19 has been a blessing for container stocks as most have been trading high amidst the pandemic. For instance, the increased US consumer demand and widespread port congestion have effectively reduced transport capacity. Freight and charter rates have also remained at record levels. However, this is not the same case for crude and product tanker stocks.
The global oil demand has taken longer to recover than expected due to the raging delta variant. Most tanker stocks have been treading water over the past year. For example, Scorpio Tankers (NYSE: STNG), which is the best performer at 24% is underperforming at S&P 500. Nordic American Tankers (NYSE: NAT), which is the retail traders’ favourite recorded the worst performance with a decline of 40%.
Liquefied Natural Gas stocks are, however, enjoying increased demand over the past year. The LNG shipping demand is also hiked by widespread incentives as both traders and energy companies profit from buying gas in the US and selling it overseas. For example, according to Cleaves Securities, the US and Japan spread hub price is almost $17 per million British thermal units while the US and UK spread is over $15.
(Written and edited by The Decision Maker team)