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Asian dry bulk set for Q4 rebound: Credit Suisse

Asian dry bulk set for Q4 rebound: Credit Suisse

Singapore: Analysts at Credit Suisse have tipped Asian dry bulk stocks to rally in the fouth quarter with China Cosco their top pick.

A latest bank report notes that the Baltic Dry Index has declined 58% from its peak on the back of weaker demand and key supply disruptions including Vale's proposed price
renegotiation, accidents in Australia, and rising port ore inventory.

"While potentially weaker China's commodity demand growth from
a slowing economy remains the key risk to freight rates," it says, "we expect a
short-term trading opportunity from a 4Q08 BDI rebound. ... Recent signs such as gradual resumption of mining operations in Australia and higher forward cargo booking rates suggest the BDI may have bottomed and a rebound is under way."

Asain dry bulk stocks are attractively priced at present, it says, with the bank's top pick being China Cosco, "with half its fleet comprising large ships, for which we expect to see the strongest rate recovery". But it warns that the outlook for 2009 looks less rosy, with a risk of tonnage oversupply. 

Credit Suisse's forecast chimes with that of Malaysian bank CIMB, reported on this site last week. [23/09/08]