Shipper Forecasts 80% Baltic Dry Rally

Can Chinese demand spur a massive rebound for the dry bulk sector’s benchmark?

Lackluster post-recession demand has weighed heavily on the dry bulk shipping sector, recently sending many of the industry’s public players down by double-digit percentages. According to China Ocean Shipping (Cosco), that all might change by the year’s end. Cosco senior researcher Kong Fanhua told Bloomberg that government-encouraged factory output in China could send the Baltic Dry Index up by 80% by the end of 2009.

As a whole, the Dry Bulk Shipping Stocks Index is ahead by 1% today. It is currently trailing the S&P 500 by -4% over the last month.

Genco Shipping & Trading (GNK) and DryShips (NADSAQ: DRYS) are leading the rally with more than 3% gains. Close behind are Excel Maritime (EXM), Navios Maritime Holdings (NM), and Eagle Bulk Shipping (NADSAQ: EGLE). All four remain in negative territory over the last five sessions.

Omega Navigation Enterprises (NADAQ: ONAV) is the Index’s only component to break even over the last week. Paragon Shipping (PRGN), Diana Shipping (DSX), and Excel remain down by more than -10% for the period.

As of this writing the Dry Bulk Shipping Index is one of the 15 worst-performing tickerspy Indexes over the last month, down by -1.1%, though if Cosco’s bold call on the BDI rebound is accurate, there could be plenty of upside for the sector.

Tags: DRYS, DSX, EGLE, EXM, GNK, NM, ONAV, PRGN