Will dry bulk be the top-performing shipping sector for 2022?

That is the conclusion of a Capital Link survey of five top equity analysts as disclosed during a webinar on Wednesday by founder Nicolas Bornozis.

Bulkers got the win not necessarily because individual analysts were wildly enthusiastic about their prospects. Indeed, two of the five had container ships as their top pick and two more chose tankers.

But because Capital Link asked analysts to rank their choices using a points system, dry bulk emerged as the safe choice as pundits had divergent views on the other two major sectors and the gas trades.

The case for dry

Jefferies analyst Randy Giveans told moderator Bornozis that dry bulk's strong 2021 had been built not so much on capesizes as on smaller units ranging from handysizes to ultramaxes.

"Are we going to see the same rates in 2022 as 2021? Maybe, maybe not. But strong rates across all asset classes? I'd say yes," Giveans said.

Clarksons Platou Securities analyst Omar Nokta agreed that 2021's returns – the best since 2008 – had been achieved with China partly absent from the capesize market in the year's second half as steel production was scaled back 20%.

"They backed off. It will be interesting to see what happens from March onward with the Chinese back in the market amid some pent-up steel production requirements fed by iron ore," Nokta said.

Jorgen Lian of DNB Markets said he is forecasting a $25,000 a day rate overall for bulkers this year, with the ability for public owners to return 25% shareholder dividends.

Clarksons Platou Securities analyst Omar Nokta says the return of China to the capesize market from March could be a substantial catalyst for dry bulk Photo: Marine Money

"This could be the early days of a lasting up-cycle," he said.

If dry bulk was the solid rather than the sexy choice, the latter might come in tankers or container ships.

Tankers or boxships?

But the question is how quickly will boxships lose steam from the dynamics that made them the top-performing carriers in 2021, and how soon will tankers pick it up after suffering the worst year in decades.

Both Giveans and Citi's Christian Wetherbee had container ships as their top choice.

Boxships "won the pandemic" with help from capacity restrictions and port congestion, Wetherbee noted. And while the supply disruptions are likely to diminish, it won't be until the second half of the year, he said.

"We would expect what has worked to continue to work," Wetherbee said.

Giveans noted that some had started to write off container ships in October, only to see rates rebound in November and keep going.

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"We think rates throughout 2022 will stay above anything we saw pre-2021," Giveans said.

When it comes to tankers, both Nokta and Stifel analyst Ben Nolan had the sector top-rated.

"We said in late-December that out of any category the potential for the most upside is in the tanker market, but it probably doesn't materialise until the second half of the year," Nolan said.

Nokta said rising tanker valuations amid a brisk sale-and-purchase market are "a leading indicator" for the market's expectation of a rates rebound.

"You have a significant amount of buying interest, bidding up values more than we've seen in five-to-seven years," Nokta said. "It's substantially strengthening without the freight market being there."