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Dry Bulk Profits Held Back by Too Many Ships

Landsberg of Commodore Research said he's paying close attention to developments in Karnataka, India, a state in Southwest India.

The area produces about 45 million tons of iron ore each year, which accounts for roughly 20% in the entire country. Recently, a major corruption scandal took place involving Karnataka's mines, and a resulting probe shut down all companies from exporting iron ore from the region. At the top of the inquiry was Karnataka Chief Minister B.S. Yediyurappa.

Indian officials decided to not only ban exports, but discontinue iron ore production in the mines completely. This has forced consumers, such as China, to turn towards Brazil and Australia.

Normally this would not be a problem, but Karnataka is a major port for Panamax vessels, and Brazil and Australia focus more on Capesize vessels. So the Panamax market could suffer from the Karnataka shutdown, Landsberg says.

DryShips competitor Eagle Bulk (EGLE)is expected to report its quarterly results on Wednesday. Analysts polled by Thomson Reuters anticipate a loss of 4 cents a share on $67.4 million in revenue in the June period.

-- Written by Joe Deaux in New York.

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