NEW YORK, NY--(Marketwire -07/13/12)- After showing some strong gains in the first quarter the shipping industry has fallen sharply since then. The Guggenheim Shipping ETF (SEA) has fallen over 14 percent over the last three months. The recent rally in Panamax shipping rates could be coming to an end as China begins to hoard record coal stocks. Five Star Equities examines the outlook for companies in the Shipping Industry and provides equity research on DryShips Inc. (DRYS) and Genco Shipping & Trading Ltd. (GNK).
Data from the China Coal Transport & Distribution and SteelHome shows that utilities in China are currently holding 91 million metric tons of coal, more than 90 percent of capacity. Panamax vessels carry more coal than any other commodity. According to the world's largest shipbroker, Clarkson Plc, the Panamax fleet will expand nearly triple the pace of cargoes in 2012.
"Chinese coal demand is so low right now," said Jeffrey Landsberg, managing director of Commodore Research & Consulting. "The Panamax market will be under pressure throughout this quarter, first and foremost due to a significant oversupply of vessels."
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DryShips Inc. owns a fleet of 47 drybulk carriers, including 29 Panamax vessels. Their capesize and Panamax dry bulk carriers carry predominantly coal and iron ore for energy and steel production. For the first quarter of 2012, the company reported a net loss of $47.5 million, or $0.12 basic and diluted loss per share. After a strong start to the year shares of DryShips have fallen over 37 percent in the last three months.
Genco Shipping & Trading Ltd. transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. The company recorded net loss attributable to Genco for the first quarter of 2012 of $33.1 million, or $0.87 basic and diluted loss per share. Comparatively, for the three months ended March 31, 2011 net income attributable to Genco was $13.4 million, or $0.38 basic and diluted earnings per share.
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