Despite the softening in shipping rates over the last few days, some analysts have therefore taken heart: Chinese steel prices have shown no signs of dropping off -- and this, they say, should protect shipping rates -- and, evidently, shipping stock prices -- from a severe retrenchment. Over the short-term, though, the major mining concerns have backed away from the shipping spot market to a large degree. Though Rio Tinto did book a capesize on the Australia to China route for $18.50 a ton on Tuesday, that's down from the $20 a ton the same route obtained a day earlier. Over the long-term, the concern remains the same: everyone still worries about a coming glut of dry-bulk ships, as fleets of newbuildings ordered during the boom years are expected to come into service next year. Gregory Lewis, a stock analyst at Credit Suisse ( CS), said in a note that an informal survey of Greek shipping operators showed that they foresee asset values for dry-bulk ships themselves to fall next year by 5% to 10%. On Tuesday, nearly all U.S.-listed dry-bulk equities were in the red, if moderately so. Leading the decliners for much of the session was Star Bulk Carriers ( SBLK), which reported its third-quarter earnings Monday after the bell. The Greek outfit beat Wall Street expectations, but did so on the back of $2.8 million in gains on its positions in FFA contracts, or shipping-rate futures, according to Dahlman Rose analyst Omar Nokta. Many companies use FFAs as a hedging instrument.
Investors in Star Bulk Carriers Corp saw new options begin trading this week, for the March 20th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the SBLK options chain for the new March 20th contracts and identified the following call contract of particular interest.