SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Aug 1, 2012) - After unexpectedly showing positive gains to start the year shipping stocks have begun to struggle once again. Oversupply in the oil tanker and dry bulk sectors continue to plague shipping rates. "Oversupply in both sectors is quite sizeable and we think that it will take 12 to 15 months to see the light at the end of the tunnel," said Marco Vetulli, senior credit officer with Moody's, a ratings agency. The Paragon Report examines investing opportunities in the Shipping Industry and provides equity research on DryShips Inc. (NASDAQ: DRYS) and Eagle Bulk Shipping Inc. (NASDAQ: EGLE).
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The Baltic Dry Index, a measure of costs to ship dry-bulk commodities, since hitting a low of 647 in February has rallied 66 percent to 1074. Despite the rally the index is still 50 percent below the levels seen in October.
"Demand for shipping has rebounded from its late-2008 lows but capacity has risen even faster, causing utilization rates and hence shipping costs to plummet," Jessop says. "Order books for delivery in 2012 suggest that this year will see a further surge in supply, maintaining the downward pressure on prices."
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DryShips Inc. is a global shipping transportation company specializing in the transportation of drybulk cargoes. Their capesize and Panamax drybulk carriers carry predominantly coal and iron ore for energy and steel production as well as grain for feedstocks. The company's fleet has a carrying capacity that totals over 3.4 million deadweight tons.
Eagle Bulk Shipping is the largest U.S.-based owner of Handymax dry bulk vessels. This modern fleet is comprised principally of Supramax class vessels, a larger and more efficient Handymax design that enjoys strong demand from customers around the world. The company is scheduled to release their second quarter 2012 financial results after market close on August 8, 2012.
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