Shrinking chemical fleet boosts Stolt as Dow cuts jobs
The chemical-tanker fleet is poised to contract for the first time in at least 17 years, boosting earnings for Stolt-Nielsen Ltd. just when Dow Chemical Co. and DuPont Co. are cutting jobs and closing plants, Bloomberg reported.
The combined capacity of the fleet will drop 1 percent next year, according to ABG Sundal Collier Holding ASA, an investment bank in Oslo whose data starts in 1996. Shares of Stolt-Nielsen, which operates the most chemical tankers, will rise 33 percent in the next 12 months and those of Bergen, Norway-based Odfjell SE (ODF) will almost double, based on the averages of estimates from 10 analysts compiled by Bloomberg.
While the International Monetary Fund predicts growth will accelerate in 2013, Dow Chemical, the largest U.S. producer, said business conditions are the worst since the recession as it cut 2,400 jobs. DuPont said it is eliminating 1,500 positions. Shipping analysts are bullish because they say cargoes track global growth and the tanker industry’s shrinking capacity contrasts with a glut in most of the rest of the merchant fleet hauling everything from coal to oil.
“The Dow headline gave me chills, but when you look at the market, there’s still strong underlying industrial demand for chemicals,” said Ole Stenhagen, an Oslo-based analyst at SEB Enskilda whose recommendations on shipping equities returned 32 percent in the past three years. Chemical-tanker owners refrained from ordering too many ships when most of the rest of the industry were “acting out their death wish,” he said.