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Tickers in this Article: DSX, FRO, DRYS, GSTL, QMAR
Understanding global supply and demand for commodities is required of an investor when choosing a shipping company as an investment.

China is just one of the emerging market countries in the "BRIC" (Brazil, Russia, India and China) moniker that is demanding commodities to further its growth.

For example, in early March India began levying an export tax on iron ore exports. The tax is likely to drive China to increase imports of iron ore from far away Brazil.

Load Up with Diana Shipping
The iron ore must be transported by vessels that dry bulk shippers like Diana Shipping (NYSE: DSX) navigate around the world's waterways to satisfy the raw material needs of emerging markets.

China's growth caused dry bulk imports to increase by more than 100% from 2001 to 2004. China's economy grew 10% in 2006 and is expected to maintain a similar growth pattern for the next several years.

Preparation for the 2008 Olympic Games as well as the construction of roads and cities in China are all driving the demand for commodities and generating revenue for shippers who can deliver the materials across the oceans and over the seas.


Athens, Greece-based Diana Shipping is a high dividend (9.6%) yielding investment tied to the commodity demands of emerging markets. Diana Shipping has a fleet consisting of 13 Panamax and 2 Capesize dry bulk carriers.

By the Numbers
Last year, Diana Shipping had a fleet utilization rate of 99.7%. Two additional Capesize dry bulk carriers are on order and scheduled for delivery during the 2nd quarter of 2010. Funding for Diana Shipping's expansion plans include offering an additional 10.5 million shares to the public. The stock offering will dilute earnings and likely apply downward pressure on the stock which will create a buying opportunity in the near term.

Diana Shipping focuses on dry bulk shipping which focuses on commodities including iron ore, coal and grain. Top line revenues for Diana Shipping rose 13% in 2006. Revenue increases were attributed to a greater number of vessels as well as higher shipping rates.

In recent news, Diana Shipping has entered into a multi-year contract with the food export and agricultural giant Cargill. Other major customers include China National Chartering Corp., Deiulemar Compagnia di Navigazione and Norden A/S.


A Healthy Mix

Diana Shipping uses a mix of long term and short term contracts when leasing out is vessels. The long term contracts tend to last for 18 months while providing a steady stream of cash flow. Larger competitor Frontline Ltd (NYSE: FRO) of Bermuda also transports coal and iron ore, but it generates the bulk of its revenues from transporting crude oil. Other publicly traded direct competitors of Diana Shipping include DryShips Inc. (Nasdaq: DRYS), Genco Shipping & Trading Limited (Nasdaq: GSTL) and Quintana Maritime Limited (Nasdaq: QMAR).

Diana Shipping's initial public offering (IPO) was on March 17th 2005. During that time frame until now, the stock has been as low as $10 and as high as $20. A good entry point for Diana Shipping given the continued strong demand for dry bulk shipping would be below $18 a share. Investors can enjoy the benefit of receiving dividends while waiting for Diana Shipping to expand its fleet and acquire more dry bulk vessels.

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