Pacific Basin Shipping spot rates could take a breather: analyst

Jefferies Hong Kong downgrades the company’s recommendation to 'hold'.

Jefferies Hong Kong has downgraded the rating of Pacific Basin Shipping to “hold” whilst raising its price target to $2.10.

According to analyst Andrew Lee, the company’s Supramax/Handysize spot rates could take a breather after hitting the highest levels since 2010 and after Q2 2021 forward rates point lower. The stock is also at mid-cycle.

“Management was bullish on the outlook during our recent post-results NDR noting average rates to be higher than 2020, strong demand year-to-date with vessel shortage in Atlantic, and higher oil price caps vessel speeds with oil a pass through cost,” Lee said.

Lee mentioned the “hold” rating was due to the latest share price being close to his price target.

“We believe spot rates could take a near-term breather as the rebound in rates was due to strong volumes during traditionally weaker Q1, strong Atlantic volumes with vessels positioned in the Pacific for US grain season, and operators covering cargo positions,” he added.