2007

Golden Ocean CEO Herman Billung presented a very optimistic picture of the dry bulk market to analysts at Pareto today, pointing out that massive dry bulk demand in the second half of 2006 had continued into 2007, while record port congestion has further bolstered rates. Secondhand values for bulk carriers continue to increase significantly and have reached all time high levels, indicating a belief in the market among dry bulk vessel buyers and owners.

Pareto analysts share a bullish view on the dry bulk sector, but express more concern over the market for crude oil transport. Though they note that the crude tanker market has improved, they are concerned about high US crude inventories, seasonally lower demand and a busy VLCC delivery schedule, the majority of which has yet to occur. They are confident in a strong market for clean product and chemical tankers, noting that solid rates are not yet reflected in the corresponding share prices, with valuations as illustrated in the graph that accompanies this article.

This is only an excerpt of Research Notes – 03/15/2007

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