Jefferies lowers dry bulk estimates on China's subdued steel outlook

Eagle Bulk Shipping

06/06/2023 15:40

** Jefferies reduces its 2023 capesize earnings estimate to
$16,000/day from $17,500/day and 2024 estimate to $19,000/day
from $21,000/day as weaker steel market in China weighs on
freight rates
    ** Capesizes typically transport 150,000-tonne cargoes such
as iron ore and coal
    ** The property sector in China has remained in flux and
industrial output appears likely to underwhelm, according to the
brokerage
    ** Downward direction of steel prices and the government's
quotas for 2023 point to a reduction in output in the coming
months - Jefferies
    ** Says industrial players are switching back to natural gas
at the expense of thermal coal, impacting dry bulk cargo
availability
    ** Natural gas prices reverted to parity with crude earlier
this year and have recently fallen to a discount after trading
at significant premiums to crude oil during 2021 and 2022
    ** "Our forecasts could prove too conservative" if China
stimulus plays out meaningfully - brokerage
    ** Expects earnings to remain profitable and for dividends
to continue, despite lowering estimates
    
 Company                                New PT      Old PT
 Seabulk International Inc  SBLK.UL     $22         $24
 Eagle Bulk Shipping Inc  EGLE.N        $55         $60
 Golden Ocean Group Ltd  GOGL.O         $9          $9.50
 Genco shipping & Trading Ltd  GNK.N    $18         $20
 
 (Reporting by Arshreet Singh)
 ((Twitter: https://twitter.com/Arshreets))