China is one of the largest commodity importers in the world. China’s manufacturing and real estate sector remains a key driver of dry bulk trade throughout the world.
One of the company’s competitive strengths is its flexibility to target several shipping and offshore markets. In this way, Ship Finance can benchmark deals across segments based on risk and reward parameters.
What Ship Finance paid for the nine ships is only a fraction of construction costs and just marginally higher than current scrap values.
At the end of the second quarter, Ship Finance reported more than $60 million of free cash—after the delivery of a Suezmax new building without leverage.
It has reduced its vessels debt quickly, narrowing loan amounts by more than 80% since 2008. With this low leverage, there is no net loan amortization required.
Cash sweep is an annual calculation whereby the full years’ average decides the final payment. But if the last two quarters are strong enough, then SFL could still get full cash sweep, despite a soft second quarter.
The third quarter has so far been firmer than the second. Plus, SFL expects an improved contribution from the two Suezmax vessels this quarter.
Container-feeder-segment rates are marginally above operating expense levels in 2014. So, the company does not foresee any significant near-term upswing in the market.
SFL has five drilling units on long-term fixed-rate bareboat contracts. The rigs generated approximately $80 million in aggregate EBITDA in 2Q2014.
SFL has a good mix of charterers, and this reduces the risk of any potential bankruptcy. The mix also supports the company’s revenue base, cash flow, and earnings, regardless of fluctuations in the short-term charter market.
The liner service is an organization-intensive business in which speed, reliability, and high service levels are important.
The SFL fleet is one of the largest in the world and has a substantial portfolio of long-term fixed charters with an average tenure of approximately ten years.
According to estimates, producing aluminum auto bodies raises the price of vehicles by more than $1, 000 per unit. Regardless, it’s expected aluminum use in auto bodies will increase tenfold by 2025.
With aluminum bodies, the total weight of a vehicle can be reduced by around 30%, and so automatically increase its fuel efficiency.
Aluminum today is used to make wheels, engines, and hoods. The average aluminum content in vehicles has grown steadily since the 1980s.
Investors in the steel industry should also track iron ore and coal prices. Iron ore and coal are the key raw materials used to make steel.
None of the countries in the CIS or the Middle East are major steel exporters. Still, some of the steel companies listed in the United States are exposed to the crises in these regions.
The U.S. market is lucrative for foreign steel companies. Even after accounting for transportation costs, steel imported from Korea and China is cheaper.
Steel consumption in NAFTA countries should grow by more than the global average, at least in the near future. This is a positive indicator for steel companies operating in the United States
As you can see, China’s growth rate was in the double digits until 2008. Even during the global financial crisis, Chinese steel consumption was increasing, mainly due to infrastructure expansion.