Capesizes climbed by a quarter last week and continued to improve today with the Baltic Capesize Index hitting its highest point since the start of December last year.
Magnus Fyhr of GMP notes capes are now 300% above their low point of $5,000 per day in April 2015 with rates moving from opex break-even to cash break-even.
Fyhr said in a report the dry cargo shares he follows rose 23.8% last week as investors responded to the rising rate environment.
Seanergy was the largest climber, with Paragon, Star Bulk, DryShips and Golden Ocean all gaining momentum.
Monday saw the Baltic Dry Index spend a third session above 1,000 points, with the market at the highest seen since the first week of December last year.
Amit Mehrotra of Deutsche Bank says the improvement in the Baltic Dry Index in the past couple of weeks follows a seasonal pattern, aided by strong South American grain volumes and limited capacity growth.
However, the analyst believes the rally has mixed implications.
“On the positive side spot rates are now above opex breakeven levels and fast-approaching all-in cash breakeven which includes debt service and debt repayment,” Mehrotra wrote in a note to clients.
“This development will help significantly reduce the cash burden of all dry bulk shippers, and should stabilize asset values which will provide add’l breathing room for companies with large newbuilding acquisition programs.
“On the negative side it may delay, or erase altogether, a more pronounced recovery in 2017, as the current improved rate environment disincentivises additional scrappage.”
