SHIPPING STOCKS BLOSSOMING - CRUDE LEADING THE PACK
After having sold-off during the past weeks, equity stock markets worldwide recouped some of their losses last week. Supporting measures from governments and central banks around the globe have been announced and started to be put into action. All these policies are based on a 'whatever it takes'- and 'much helps much'-approach which indeed is the only way to fight the economic implications of the pandemic. If coupled with speedy and unbureaucratic processing, there is a good chance that the measures will work. Although, an economic downturn - be it V-, U- or L-shaped - is inevitable. Measures are aimed at mitigating the worst and avoid a sustained worldwide recession.
Shipping stock markets rose like phoenix from the ashes last week, gaining more than 14 percent overall. It seems that investors may have realized that some maritime sectors have been overly thrashed. Crude shipping stocks are leading the pack, jumping by an incredible 35 percent w-o-w, followed by product- and LNG-shipping stocks at some distance. The crude sector has been the predominant beneficiary so far, profiting from the oil price war. The huge oil supply coupled with the currently very low oil demand led to a very strong demand for storage capacities onshore and offshore. After a short backdrop, tanker owners could enjoy spot charter rates of around TUSD 175/d for VLCCs last week. A 90-days voyage would generate a net profit of USD 13m. To put this into perspective, floating storage may earn them around USD 14m net profit for one year at current TC rates of TUSD 65/d.
But the coronavirus is still raging in many a country. As long as numbers of infected people continue to increase, setbacks in stock prices must be expected. The worst is still ahead. Now let us put the markets aside for one moment. Be sensible, be helpful, be compassionate with your fellow people. One might gain other merits in such times.
Stay safe and well.