Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: The sector has rallied in recent months on strong gains in shipping rates, and today's 9.1% pop in the Dry Bulk Index -- its largest jump since 2009 -- suggests that the momentum is only picking up. In fact, the catalyst for the spike was an 8.1% increase in Chinese iron ore imports, giving analysts plenty of good vibes over steel output in China and, in turn, the demand for vessels needed to ship it.
Now what: Don't expect demand to slow anytime soon. "Steel production in China is defying a seasonal slowdown in prices, allowing mills to absorb high iron ore imports," wrote Morgan Stanley analyst Fotis Giannakoulis. "As long as high steel prices offer attractive margins for steel mills, there is room for strong imports." Of course, given just how quickly dry bulk stocks have shot up recently -- Guggenheim Shipping ETF (NYSEMKT:SEA) is up 7% in September alone -- I'd wait for some of the sector excitement to fade before jumping in.
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