Why Dry Bulk Stocks Had Another Good Day

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.

What: Shares of dry bulk stocks Genco Shipping (NYSE: GNK  ) , DryShips (NASDAQ: DRYS  ) , and Navios Maritime (NYSE: NM  ) climbed yet again today on continued strength in the Baltic Dry Index.

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.  

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.



Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2629055, ~/Articles/ArticleHandler.aspx, 10/31/2014 12:20:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement