DryShips Inc

Many market participants are forecasting a further fall in coal imports for China in 2016.

The demolition market for dry bulk carriers has been very active lately.

Iron ore and coal imports from China remain weak, and steel prices remain depressed. This should continue to weigh on the dry bulk sector.

Dry bulk shipping companies transport iron ore more than any other commodity. So it’s important for investors to watch shipments from the world’s largest iron ore exporters.

The historical dividend yield for Navios Maritime Partners reached its highest point of 41% in 2008, when the broader market was doing very poorly, which spooked investors after the Lehman Brothers crisis.

Navios Maritime Partners LP (NMM) is less sensitive to shipping cycles due to its long-term charters and staged expirations.

Since releasing its 3Q15 results on November 3, Navios Maritime Partners has fallen by 50%. NMM cut its distributions by 52% from $1.77 per unit to $0.85 per unit annually.

China’s real estate climate index was at 93.34 in October. China’s real estate climate index has been on a broad downtrend since February 2013.

The iron ore inventory levels at Chinese ports can impact purchasing decisions. When the Chinese market (MCHI) rises, shipping stocks tend to rise as well.

While India could provide temporary relief to dry bulk shippers, its increasing domestic coal output doesn’t bode well for seaborne coal trade.

Dry bulk shipping vessel values usually show the expectations of future freight rates. Newbuilds’ rates gauge the long-term fundamentals.

The BDI (Baltic Dry Index) fell for 21 straight sessions to an all-time low of 498 on November 20. This is the lowest value since the BDI started recording in 1985.

So far, 2015 has been the worst year on record for the dry bulk shipping industry. After February, market participants got concerned about the industry’s future.

The Baltic Dry Index has fallen 15.7% in the first 26 days of October. This is after a 1.2% fall in the month of September. Most of the fall is due to the Capesize rates decline.

Industrial production remains an important gauge of economic activity. Greece’s IIP (industrial production index) rose 4.5% in August 2015 from August 2014.

China’s iron ore port inventory has been declining consecutively for the past five weeks. For the week ending September 18, inventories stood at 80.55 million tons, according to the data collected from 44 ports in China by SteelHome.

For the first eight months of 2015, China’s coal imports have fallen by 31.4% YoY (year-over-year). In August, China imported a total of 17.5 million tons of coal—a decline of 17.7% month-over-month.

Most of the players in the dry bulk shipping space have fallen since the beginning of the year. DryShips (DRYS) has fallen the most by 85% YTD as of September 28.

The BDI (Baltic Dry Index) is a leading indicator for the bulk shipping industry. It’s a measure of the cost of shipping major bulk commodities on a number of shipping routes.

Hedge funds like Caspian, Oaktree, and Monarch are going against the crowd by pinning their hopes on the assumption that SBLK’s share price has reached its floor.

Navios Holdings and Safe Bulkers have dividend yields of 8.8% and 1.3%, respectively. In contrast, Naviois Maritime Partners has an attractive 21% dividend yield.

Investors should take note of the short-term liquidity profile for dry bulk companies. In a weaker shipping rates environment, short-term liquidity could come under increasing pressure.

Diana Shipping (DSX) has the lowest financial leverage with debt to assets of 33.2% as of June 30. Companies with the strongest balance sheet can weather the weakness for a longer time.

Dry bulk shipping companies usually work under two types of contracts: spot charter and time charter. Spot exposure measures the extent to which vessels are exposed to the spot market contract.

In this article, we’ll take a look at the fleet profiles for the major dry bulk companies. Depending on volume, trade routes, and the geographical limitations of ports, various classes of vessels are employed.

Major players in the dry bulk shipping space have taken a hard fall this year. SEA, an index weighted with dry bulk shipping companies, has lost 14.5% so far in 2015.

Navios Maritime Partners (NMM) has a contract with the subsidiary of Navios Maritime Holdings (NM).

As a limited partnership, Navios Maritime Partners (NMM) tries to keep its distributions stable. Its ability to pay distributions came under increased pressure.…

Newbuild vessel prices for all of the ship sizes remained constant in July 2015—compared to June 2015—according to data from Athenian Shipbrokers.

The Baltic Dry Index is a leading indicator for the bulk shipping industry. It measures the cost of shipping major bulk commodities on a number of shipping routes.

So far, 2015 has been a roller coaster ride for the dry bulk shipping industry. The Guggenheim Shipping ETF (SEA) has fallen by 12%.

Navios Maritime Partners has maintained dividend yields above those of the broad MLP universe and energy MLPs.

Navios Maritime Partners’ management noted during its earnings call, which was held on July 30, that its scrapping activity increased in 2015.

In this series, we’ll discuss some of the important metrics that drive the dry bulk shipping industry. Investors can gain exposure to commodities through the SPDR S&P Metals and Mining ETF (XME).

Navios Maritime Partners (NMM) seems like a good way to play the current weak dry bulk market. It has an upside in case of an eventual recovery.

Navios Holdings and Safe Bulkers have dividend yields of 6.4% and 1.3%, respectively. NMM has an attractive 17% dividend yield. DryShips and Diana haven’t paid dividends in a long time.

What are the future plans for companies in the dry bulk shipping space in the face of a current weak market scenario? Future plans for acquisitions or buybacks and capital deployment are significant drivers of future prospects.

For Diana Shipping, contract rollover is a near to medium-term risk. Among its Capesize fleet, almost all of the 12 contracts will expire within about a year and a half.

For 1Q15, Navios Maritime Partners reported daily vessel operating expenses of $5,107. This is very low compared to 1Q15 expenses per day for DryShips and Diana Shipping.

Major players in the dry bulk shipping space have taken a hard fall this year. China’s appetite for iron ore and coal has waned, driving the current oversupply in the market.

Based on shipping companies’ fixed operating expenses, we can estimate that current time-charter rates shouldn’t go down much further. We’re witnessing pretty much the floor at prevailing rates.

Navio Maritime Partners’ lower daily vessel operating expenses suggest that a larger share of revenue will be distributed to investors and the general partner.

China’s HSBC manufacturing PMI fell to 48.9 in April. This is the lowest level since April 2014. A reading below 50 indicates contraction.

If the orderbook level continues to fall more from this point and demand continues to grow, we could see some life in dry bulk shipping rates and equities.

Secondhand vessels are delivered faster than newbuilds. As a result, secondhand vessels represent more of the short to medium-term outlook.

The Baltic Dry Index is a leading indicator for the bulk shipping industry. It tracks a number of shipping routes and the transportation costs.

Dry bulk shipping got a major boost from China’s increased appetite for iron ore and coal almost eight years ago. Large ship orders are driving the current oversupply.

In the first two months of 2015, China’s crude steel output dropped 0.21% year-over-year to 130.5 million tons, according to government data.