Cantor Fitzgerald

Natasha Boyden Comments: Outlook For Marine Transportation - The Wall Street Transcript

The Wall Street Transcript, October 14, 2009

As part of theTransportation Report we asked Natasha Boyden of Cantor Fitzgerald to give us an overview of Marine Transportation .  She thinks the dry bulkers are certainly moving up a bit better and their rates have been falling dramatically.

Ms. Boyden: The dry bulkers are certainly moving up a little better. Their rates over the last couple of weeks have been fall­ing dramatically and I think a lot of that is due to the fact that Vale (VALE) has taken itself out of the market, is no longer putting in orders I think. But in the second half of the year, we're certainly seeing lower iron ore imports into China, as their inventory is hold­ing steady at about 76 million tons and they certainly don't look to be increasing that. Steel prices have fallen pretty dramatically, down about 15% in the last month, which to us does indicate a weakening in demand for the products. I think the last quarter of this year is going to be definitely not as good as the first three quarters, which I think took everybody by surprise. I think the worry here is if they drop another $10,000 it will be at breakeven again or below. It's certainly something we're watching very closely.

The fact that the dry bulk space has been behaving so well is really, in our opinion, much to do with the Chinese stimulus pack­age. It was about $586 billion in 2009 and 2010, about 50% of that is for infrastructure. Very clearly that would stimulate domestic steel demands, et­cetera. It's a question of whether or not we're seeing real demand or we're seeing stimulus demand. Scrapping levels were pretty high in the first half of 2009, but they have slowed down since. Deliveries have been much less than anticipated. We expect that to reverse later this year.