Shipping stocks have outperformed the wider market by huge margins so far this year — and this is only the beginning, analysts say.

Clarksons Platou Securities said crude tanker and bulker equities have led the way in 2022, putting on 41% each.

Analysts Frode Morkedal and Even Kolsgaard called shipping the “belle of the ball” this year.

In the short Easter trading week, shipping shares posted more gains of between 2% and 3%. Overall, the stocks have risen 26% in 2022, significantly better than the broader market. For example, the S&P 500 index is down 8% in the same period.

Product tanker and chemical tanker companies have added 35% and 29% in value, respectively.

The one lagging sector is container shipping, which has only risen 7%. These companies have been pressured by softer freight rates recently, Clarksons Platou said.

But the analysts added that rising commodity prices, although potentially negative for the overall world economy, imply more room for freight to thrive.

“Indeed, we have seen wider price spreads between geographical regions, spurring ships to travel over longer distances,” they said. “Usually, a global recession is the main risk for shipping but, for once, the supply side of shipping is arguably the best we have seen for decades.”

Multi-year recovery

Morkedal and Kolsgaard believe the low orderbook for newbuildings means net fleet growth is very muted overall.

They added that the current lockdowns in China also mean shipyards in the country are experiencing delays with deliveries.

MOL and Trafigura bid to provide biofuel for chemical tankers globally
 Read more

“Combined with strained supply chains, and continued port congestions around the world, we believe the very favourable supply side means that shipping is just in the early innings of a multi-year recovery cycle,” the analysts said.

Clarksons Platou argues that equity valuations are still modest compared with net asset values, with tanker values likely to appreciate in line with the recovery of the freight market.

If VLCC rates return to 20-year historical averages of $42,900 per day, the investment bank calculates that ship values could jump 45%.