China’s real estate climate index measures the country’s aggregate business activity for land and real estate. China’s real estate climate index rose marginally in November
After bottoming out at 79.4 million tons at the end of June, China’s iron ore port inventory has started inching up. For the week ended January 1, 2016, inventories were 92.6 million tons.
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.
While India could provide temporary relief to dry bulk shippers, its increasing domestic coal output doesn’t bode well for seaborne coal trade and dry bulker fortunes.
Ship orders usually reflect managers’ expectations about the shipping industry’s future supply-and-demand balance. Weak ordering and more selling reflect expectations of more downside ahead.
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.
Even after the cut, Navios Partners’ dividend yield is above those of the broad MLP universe and energy MLPs. NMM’s current yield is 2.8 times that of the Alerian MLP Index.
In a bid to provide regular distributions to its unitholders, Navios Maritime Partners started acquiring container vessels in December 2013. Its management expects the container trade to continue growing.
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.
October’s aggregate financing, China’s broadest measure of new credit and liquidity, came in at 476.7 billion yuan—a fall of 30% YoY and 63.4% month-over-month.
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.
Dry bulk shipping companies transport iron ore more than any other commodity. It’s important for investors to watch the shipments from Australia and Brazil.
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.
Dry bulk shipping companies are struggling with the worst freight rate environment in the last eight years due to an oversupply of vessels and weaker demand, especially from China.
China’s factory activity is a key driver for shipping companies. China’s trade volume drives the bulk of the global shipping industry. A rise in China’s factory activity is generally favorable for shipping companies.
Iron ore inventory levels at Chinese ports can impact purchasing decisions because they reflect the safety net and imbalance between iron ore supply and steel mill demand.
The strong momentum of shipments is expected to continue as major iron ore miners increase their capacities. Vale SA (VALE) reported record quarterly iron ore production for 3Q15.
While India could provide temporary relief to dry bulk shippers, its increasing domestic coal output doesn’t bode well for seaborne coal trade and ultimately for fortunes of dry bulkers.
While newbuild prices declined in September, vessel values for five-year vessels remained constant month-over-month. Five-year-old Capesize and Panamax vessels were $35 million and $18 million, respectively.
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.
Most of the players in the dry bulk shipping space have fallen since the beginning of the year. DryShips (DRYS) fell the most by 82% year-to-date as of October 26, 2015.
Industrial production remains an important gauge of economic activity. Greece’s IIP (industrial production index) rose 4.5% in August 2015 from August 2014.
All the major dry bulk shippers have been negatively impacted by weak demand. DryShips’s (DRYS) share price has fallen by 85% year-to-date, and it had to sell all its tankers in 2Q15.
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.
Iron ore shipments through Port Hedland reached an all-time high of 39.2 million tons in August as compared to 35.3 million tons in July and 37.4 million tons in August 2014.
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.
Newbuild vessel prices for all ship sizes declined in August 2015. Newbuild prices have fallen by 12.9% YoY (year-over-year) for Capesize vessels and 12.3% for Panamax vessels.
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.
Long-term charter contracts provide visibility to revenues and cash flows. But there’s always a rechartering risk involved if these contracts roll off in a weaker spot market.
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.
Daily vessel operating expense is an important metric to gauge the operational efficiency of marine shipping companies. It affects companies’ costs and earnings.
Average fleet age is an important indicator for a company’s performance. Usually, old vessels cost more to operate because they tend to have higher maintenance expenses.
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.
Comparing dividend yield Because Navios Maritime Partners (NMM) is an MLP, we’ve compared its dividend yield to the S&P MLP Index and the Alerian MLP Index. The S&P MLP Index represents a broad MLP universe, providing exposure to leading partnerships trading on the NYSE and the NASDAQ. The Alerian MLP Index represents leading large- and […]
As a limited partnership, Navios Maritime Partners (NMM) tries to keep its distributions stable. Its ability to pay distributions came under increased pressure.…
In this series, we’ll look at Navios Maritime Partners (NMM) and assess whether it will be able to provide above-average returns amid weak dry bulk market fundamentals.
China consumes two-thirds of the world’s seaborne iron ore. So, it’s important to track steel production. In July, China’s steel production fell by 4.60% YoY.
Brazil’s iron ore exports rose in July. Its iron ore exports came in at 34 million tons in July—compared to 32 million tons in June. Iron ore exports rose 9.10%.
China imported a total of 21.3 million tons of coal in July. It rose 28% from June. However, for the first seven months of 2015, the imports fell 34% YoY.
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.
Navios Maritime Holdings has a dividend yield of 6.4%. Safe Bulkers has a dividend yield of 1.3%. DryShips and Diana Shipping have not paid dividends in a long time.
A significant number of Navios Maritime Partners’ contracts are expiring over the next year. Sixteen dry bulk vessels are coming off charter in 2015–2016
Navios Maritime Partners’ strategy is to generate stable cash flows through long-term charters. Long-term charter contracts provide visibility to revenues and cash flows.
Navios Maritime Partners’ distribution-paying ability came under increased pressure when the dry bulk shipping industry suffered due to weak demand growth for commodities in China.
Navios Maritime Partners’ management decided not to exercise an option to acquire a container vessel in June because it thought the credit environment was not optimal for risk-taking.
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 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.
Average fleet age is an important indicator for a company’s performance. Usually, old vessels cost more to operate because they tend to have higher maintenance expenses.
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.
The falling coal import trend started in 2014. It’s continuing well into 2015 with greater force. In the first five months of 2015, China’s coal imports declined by 38.2%.
China’s PMI (purchasing managers’ index) is released on a monthly basis by Markit. Flash PMI figures provide early insights into China’s manufacturing sector.
