This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Dry Bulk Comeback Could Be Huge Christmas Gift

NEW YORK (TheStreet) -- As the market goes, so goes dry bulk shipping stocks.

Most major dry bulk carriers enjoyed an uptick Wednesday as the major U.S. indices spiked on news that the Federal Reserve and foreign central banks would increase global liquidity, but this could mean feast or famine, depending on when you jump into dry bulk for December.

One industry trader said he thinks dry bulk stocks for a couple of reasons will move higher as 2012 approaches.

"What is interesting in the space ... is that all shipping stocks have totally missed the rally. They are lagging behind by at least 30%," according to the trader, who spoke on the condition of anonymity. "So, eventually the comeback is going to be huge."

The source also said that China's loosening on Wednesday of its banks' reserve requirements will be a positive for 2012, which means that dry bulk stocks could experience an early, slight uptick in December from the news.

"All in all, I think they will be moving higher," according to the industry trader.

The Baltic Dry Index and Capesize rates have recently flattened due to increased steel stockpiles by Chinese steelmakers, after they crept up from mid-August to late October on Chinese iron ore demand.

"China steel production is still low; with that being said, they're still fixing a pretty firm amount of vessels to haul iron ore," Jeffrey Landsberg, Commodore Research dry bulk industry expert, said. Landsberg also said rates aren't increasing because there are still a large number of vessels being delivered.

There is some promise that a seasonal rise in thermal coal demand could result in a slight rise in rates for Supramax, Panamax and some Capesize vessels as December brings the winter weather.

But Natasha Boyden, shipping analyst at Cantor Fitzgerald, isn't as optimistic about the industry going into December due to macro-economic uncertainties.

"I think the big question is 'how sustainable are these rates?' because if you look at the forward curve it comes down pretty dramatically," Boyden said. "I think you have to look at the overall picture. ... You have, overall, global fears of a slowdown; you have the European debt crisis.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs