A pair of owners in the clean products sector helped propel another strong week for US-listed shipping stocks as investors appear to be recognising another front for market recovery from Covid-depressed demand.
Ireland-based Ardmore Shipping logged a 24.4% gain one-week gain at the end of Friday. It was closely trailed by Scorpio Tankers, the world's largest product carrier owner, which saw a 19.7% jump.
Both shipowners were in the top five performers among the 32 listings under coverage of investment bank Jefferies. Overall, 31 names notched gains.
Those stocks gained an average of 10.1% during the week, again outpacing broader indices such as the S&P 500 (a 2.6% rise) and the small-cap Russell 2000 index (a 7.2% jump).
Jefferies lead shipping analyst Randy Giveans said the gains reflected not only an improved outlook for the products trade, but the long-suffering nature of the stocks.
"I believe consensus is for a fast rebound in refined products tanker demand," Giveans told TradeWinds.
"Also, maybe more importantly, Ardmore and Scorpio both fell to absurdly cheap discounts to NAV [net asset value], so a faster recovery is expected compared to the crude tankers, who did not fall as low in recent months."
Scorpio Tankers president Robert Bugbee called a recent uptick in rates for LR2 tankers "the turn we've been waiting for" and predicted a trickle down to smaller vessel classes.
Ardmore chief executive Anthony Gurnee was less emphatic but till optimistic.
"While we are not seeing a lift in rates just yet other than the Arabian Gulf, the sentiment seems to be improving. Meanwhile the broader economic outlook is getting much brighter, which should be a harbinger of recovery in product tanker market activity," Gurnee told TradeWinds.
Product tankers were not the only operating sector with a strong week. Containerships continued their good run with a 15% gain, followed closely by dry bulk (14%).
Israeli liner company Zim led all US-listed stocks with a 30.8% gain, continuing its bull run following a disappointing initial public offering (IPO) in January.
Zim closed the week at $25.25, up about 68% from its 27 January IPO price, and more than double the $11.52 close seen on a disastrous first trading day.
"It certainly should never have gotten to below $12 — that was just some crazy post-IPO trading — and the IPO price was sold at a discount to the true value," Giveans said.
"We think the shares have more room to run higher from here. We are very surprised that some of the banks who initiated on the name had a 'hold' rating with a low price target. It remains an attractive buy-rated name for me."
Dry bulk shares continued to build on recent strength, with four names in the top 10 gainers. Navios Maritime Partners led at 23.6%, followed by Star Bulk Carriers (17.1%), Eagle Bulk Shipping (16.9%) and Diana Shipping (16.6%).
