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TIME FOR BUILDING A BOTTOM
Last week maritime stocks showed a gradual improvement in sentiment. The Dow Jones Global Shipping Index gained 1.4% w-o-w. Best performers in our universe were product tanker companies (+7.2%), followed by the crude tanker sector (+6.1%). Even the LNG carrier stocks saw some relief with a gain of 4.2% on average.
Latest market data from Clarkson reveals a gradual improvement in tanker earnings from USD/day 18,012 to 19,572. Their second-hand tanker price index also improved slightly. All in all, we are under the impression that financial markets may have overreacted in the last weeks and may tend to normalize, again. Some companies will start paying quite huge dividend yields from next week onwards.
On the other hand, our last years favorite, the VLGC sector is lagging behind. Its index even fell another 1.3% w-o-w. There are some rumors and discussions in the market about a delay in US export capacities for LPG and the effect of Covid-19 on Chinese demand for propane and butane. However, current freight earnings and TCEs are quite stable at the moment. We guess that the sentiment in the market is probably skewed to the negative side, whereas the underlying business is still stable. Normally March is the time for the end of the destocking period in US propane stocks. In about four weeks time we will know, whether US propane exports continue to grow.
After some weeks of ongoing pressure, our trading strategy produced a nice weekly gain of 2.5%, even slightly better than our benchmark. We see this as a good sign for the weeks to come. We are still underweight in dry bulk stocks but we started to build a small long position in the BDI as we are betting on a seasonal recovery to come - even if this may take some time.
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