Commodities shippers Diana Shipping and Star Bulk Carriers on Tuesday reported first-quarter results that beat expectations, helped by demand for harder-to-get basic materials.
Star Bulk, which reported after the close, fell modestly Wednesday after some volatile swings. Diana Shipping, which reported early Tuesday, retreated Wednesday after a strong move on earnings.
The two companies report as demand for products like coal, grains and chemicals remains in flux. Concerns persist over food and energy shortages, while Russia's invasion of Ukraine and Covid lockdowns and pollution curbs on China's economy have also disrupted trade of bulk goods across ocean shipping lanes.
Star Bulk Earnings, Trade 'Dislocations'
Star Bulk said demand was "still robust with continued strong commodity flows over longer distances due to infrastructure investments and trade dislocations."
The company also said the market for dry bulk — or material like grain or coal that can be shipped and stored in bulk form — remained "favorable" despite a wobbling economy. The company also said new environmental regulations on ships, and fewer orders for new ones, would keep fleets lean and help buoy that market.
"(The main) driver remains the limited supply growth with the historically low vessel orderbook and the upcoming environmental regulations further suppressing orders and speeds," the company said.
Star Bulk earned $1.72 per share. That was above estimates for $1.47 per share. Revenue came in at around $360.9 million. That beat estimates for $288 million.
Shares retreated 2.7% to 31.89 after sinking to 30.62 intraday in the stock market today. Star Bulk stock fell 2.4% on Tuesday, but from 52-week highs. Shares have a 98 Composite Rating and a 99 EPS Rating.
Star Bulk operates a fleet of more than 120 ships. It is based in Greece.
When Star Bulk reported its last round of earnings in February, it cited a number of factors that weighed on dry-bulk trade earlier this year. Among them: Indonesia's coal export ban in January, the Winter Olympics in China and harsh weather in Brazil.
However, the company also said rising commodity prices had led producers to crank up production and prompt others to secure dwindling global supplies ahead of time.
"Record high commodity prices are providing a strong incentive to producers of dry bulk cargoes to expand output and exports during the next few years whilst just-in-time stocks may be replenishing on a just-in-case basis," CEO Petros Pappas said in February.
Diana Shipping Earnings
Diana Shipping earned 31 cents a share, above estimates for 28 cents and a loss from a year ago. Revenue rose 61% to $65.93 million, beating estimates for $64.6 million.
Shares fell 4.25% to 6.09 after jumping 5.8% on Tuesday. DSX stock was extended from a 5.78 entry of a cup-with-handle base.
Based in Greece, Diana Shipping ran nearly three dozen ships as of the fourth quarter. It owns or leases those ships. Coal and iron ore, a major ingredient needed to make steel, made up around 85% of the company's cargo shipments last year. Grains made up around 9%.
Like other shipping stocks, Diana Shipping Composite Rating, at 99, is strong. Its EPS Rating is 75.
Shipping Stocks And China, Global Demand
Russia's invasion of Ukraine has strained supplies and purchases for things like oil and wheat, pushing their prices higher. Buyers of those and other commodities have had to work around the shutdown of Ukraine's ports and Western nations' efforts to disconnect Russia's economy from the world.
China's pandemic-related lockdowns — and its economy's potential reopening — have also caused more uncertainty over its own demand for goods and the state of the world's battered supply chains.
Snags up and down the supply chain have pushed up shipping costs. But some analysts have said the boom in container-shipping stocks last year was greater than the one for bulk commodities transporters. As a result, they say, the former tried to expand more than the latter, and is thus more vulnerable to overcapacity if the economy turns south.
When Diana Shipping reported fourth-quarter results in February, management said "the war in Ukraine may have a broad-based negative impact on the dry bulk market with ports in the Black Sea halting operations for an undetermined period of time."
Diana also said at that time that China's "depressed" real estate market had curtailed growth prospects. And it noted a dip in the nation's steel production last year, amid efforts to cut pollution. On Tuesday, Diana, citing shipping services company Clarksons, said imports of iron ore were likely decline this year, partly due to lower output.
Globally, Clarksons had forecast 2.2% growth this year for total dry-bulk trade, Star Bulk said on its own earnings call in February.
