In January, Drewry’s Dry Bulk Equity Index rose 2.1% due to the intensifying conflict in the Red Sea which is taking the TCE rates higher than expected. The index outperformed the S&P 500 which rose 1.6% during the same time.

Diana Shipping is continuing with its fleet renewal and diversification program. The company announced the renewal of three time charter contracts in January and has also sold its 18-year Panamax vessel for USD 12.99mn. Additionally, the company announced the expansion of a previously formed JV for offshore wind service vessels. After exercising the option to acquire two additional CSOVs, the JV will now have contracts to acquire four CSOVs with deliveries scheduled between 3Q23 and 3Q26. Star Bulk and Eagle Bulk have also announced a merger to become the biggest US-listed dry bulk shipping company. We covered this in more detail in our opinion piece.

In January, DS Norden’s shares increased by a significant 13.6%, primarily driven by the escalation in the Time Charter Equivalent (TCE) rate for product tankers, a consequence of the Red Sea crisis. Concurrently, the stocks of Golden Ocean, Star Bulk Carriers and Diana Shipping also rose by 8.3%, 2.3% and 1.3% respectively. However, Pacific Basin was the sole constituent of the index to witness a decline, with its shares falling by 15.7%, largely attributed to the frailty of the Chinese economy which was impacted by the liquidation of Evergrande.

In 2023, Golden Ocean and Star Bulk Carrier rose 12.2% and 10.7% respectively as they benefitted from the rise in Capesize TCE rates and asset prices. Pacific Basin’s stock remained muted, rising only 0.2%. However, the stock of Diana Shipping and DS Norden declined 23.8% and 21.1% respectively in 2023 with the fall in their revenue.

Charter rates were on the rise in December as there was a substantial increase in demand for vessels. The rates for Capesize vessels increased by 20% MoM due to higher coal and iron ore trade. Increased demand for coal and iron ore, along with soybean and grain, aided vessel utilisation and led to the inactivity of vessels (in number terms) dropping to the year’s lowest level in December.

Charter rates started to fall in January due to seasonal weakness but remain higher than similar period last year as vessels are being routed away from the Suez Canal towards the Cape of Good Hope due to conflict in the Red Sea. This is keeping the vessels busy and leading to higher-than-expected rates.

Asset prices have been rising due to limited availability in shipyards and the low orderbook-to-fleet ratio. The price of 5-year-old Capesize and Panamax vessels rose 20.7% and 12.5% respectively in 2023 and have continued the uptrend in January.

Source: Drewry Maritime Financial Research