Five Star Equities: Shipping Industry to Face Falling Panamax Shipping Rates

July 16, 2012

After showing some strong gains in the first quarter the shipping industry has fallen sharply since then. The Guggenheim Shipping ETF (SEA) has fallen over 14 percent over the last three months, FiveStarEquities reports.

The recent rally in Panamax shipping rates could be coming to an end as China begins to hoard record coal stocks. Five Star Equities examines the outlook for companies in the Shipping Industry and provides equity research on Excel Maritime Carriers Ltd. and Eagle Bulk Shipping Inc.

Data from the China Coal Transport & Distribution and SteelHome shows that utilities in China are currently holding 91 million metric tons of coal, more than 90 percent of capacity. Panamax vessels carry more coal than any other commodity. According to the world’s largest shipbroker, Clarkson Plc, the Panamax fleet will expand nearly triple the pace of cargoes in 2012.

“Chinese coal demand is so low right now,” said Jeffrey Landsberg, managing director of Commodore Research & Consulting. “The Panamax market will be under pressure throughout this quarter, first and foremost due to a significant oversupply of vessels.”

Excel is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. Excel reported voyage revenues for the first quarter of 2012 amounting to $64.1 million compared to $97.3 million for the same period in 2011, a decrease of approximately 34.1%.

Eagle Bulk Shipping Company is a leading global owner of Supramax dry bulk vessels. The company recently announced that Adir Katzav, formerly Director of Financial Reporting, has been promoted to Chief Financial Officer. Mr. Katzav succeeds Mr. Alan S. Ginsberg, who has advised the Company of his decision to pursue other professional interests. Shares of the company have fallen nearly 60 percent in the last three months.

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Source: Five Star Equities, July 16, 2012