Dahlman Rose & Co. analyst Omar Nokta wrote in a client note that rates for Capesize vessels -- the largest drybulk ship -- have jumped to over $35,000 per day because of firming Chinese steel prices. And Panamax rates have recovered to the highest level since September, above $20,000 a day, he wrote.
He wrote that ship values may be set to increase 20 percent -- more if demand continues to get stronger. That would translate into "much higher equity valuations" for drybulk shippers, he wrote.
"More importantly, companies would be in a much stronger position with respect to loan-to-value covenants which would allow substantial flexibility to managements," he wrote.
Nokta upgraded six shipping stocks to buy, from hold: Diana Shipping, Eagle Bulk, Genco Shipping, Paragon Shipping, Safe Bulkers, and Star Bulk. He also upgraded Excel Maritime to hold from sell.
He left ratings unchanged at hold for DryShips, Golden Ocean, Navios Maritime, and TBS International.
In afternoon trading, Diana Shipping shares rose 53 cents, or 3.4 percent, to $16.31, Eagle Bulk rose 59 cents, or 8.7 percent, to $7.35, Genco rose $1.22, or 6.5 percent, to $20.06, Paragon rose 62 cents, or 15.8 percent, to $4.55, Safe Bulkers rose $1.06, or 16.8 percent,t o $7.37, and Star Bulk rose 49 cents, or 13.6 percent, to $4.06. Excel Maritime was up 60 cents, or 6.3 percent, to $10.17.
DryShips rose 15 cents, or 2.1 percent, to $7.19, Navios Maritim was up 27 cents, or 6.4 percent, to $4.46, and TBS rose $1.04, or 11.4 percent, to $10.14.
