Week 14: Tanker Stocks Tank, Analysts Change Recommendations
Baltic Dirty Tanker Index
The BDTI (Baltic Dirty Tanker Index) was at 752 on April 8, 2016, having fallen from 833 at the start of the week on March 4. The BDTI fell every day last week.
The BDTI tracks shipping rates for crude oil on representative routes. Researchers and analysts follow this index to assess the revenue and potential earnings of crude oil (DBO) tanker companies like Frontline (FRO), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP), Nordic American Tankers (NAT), DHT Holdings (DHT), Gener8 Maritime (GNRT), Navios Maritime Midstream Partners (NAP), and Euronav (EURN). Investors who are interested in broader exposure to the industrials sector can invest in the SPDR Dow Jones Industrial Average ETF (DIA).
Seasonality
Seasonality is a known factor in tanker rates, so it’s important to look at the index on a YoY (year-over-year) basis. With the exception of the first day of last week, the index was below last year’s levels. On March 8, the index was 2.5% lower than last year’s level.
Tanker rates
After a spike in tanker rates in the previous week (week 13), tanker rates tumbled in the week ending April 8. According to the Gibson report, charterers moved cautiously away from the tight positions that had provoked the latest spike. On April 8, rates on the VLCC (very large crude carrier) benchmark route dropped to $48,403 per day from $78,045 per day on April 1. Suezmax rates were relatively unchanged from the previous week’s rate of $24,817.
Browse this series on Market Realist: