Dry Bulk Freight Rates may have peaked

The spectacular rise in the Dry Bulk Freight Rates has propelled the share price of many Dry Bulk carriers, including those listed on our local bourse (such as Maybulk & Hubline). Looking at Chart 1, we can see that the main barometer of Dry Bulk Freight Rates, i.e. the Baltic Drybulk Index ('BDI') has now shown a slight "hookdown". Has the BDI peaked? Only time will tell.

If the BDI have peaked, the ensuing correction would impact the share prices of Dry Bulk carriers severely. From the table below, we can see that the share prices of Dry Bulk carriers listed in the US has corrected by 3-13% on November 12 alone. A closer study of the individual stocks will reveal that their share price has peaked towards the end of October & most of them are off their peak by about 30%. While the peaking in the share prices of our local drybulk carriers (see Chart 2 & 3 for the performance of Maybulk & Hubline, respectively) coincided with their overseas counterparts, their share price correction has been relatively shallow. Thus, we can expect further weakness ahead for these shares. Avoid Maybulk & Hubline for short-term trading.


Chart 1: Baltic Drybulk Rates chart as at November 12 (courtesy of Investment.tools.com)


Table: Drybulk Carriers' Share Price Performance as at November 12 (courtesy of Capital Link Shipping)


Chart 2: Maybulk's weekly chart as at November 12 (courtesy of Quickcharts)


Chart 3: Hubline's weekly chart as at November 12 (courtesy of Quickcharts)