Safe Bulkers Inc

On November 1, ship orders for all key dry bulk vessel classes fell. Ship orders reflect managers’ expectations of future supply and demand differences.

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

Continued from Part 2 Ship construction activity Part 2 of this series explains how ship orders can illustrate managers’ expectations for future supply and demand differentials. But new ship orders don’t always translate into new constructions right away. Sometimes, shipping firms specify a particular date of delivery for the new orders. If the delivery date is farther […]

China buys around two-thirds of the world’s iron ore—iron ore supply in China outpaced demand by 52 million tons in the first half of 2014, according to the China Iron and Steel Association (or CISA).

In a highly commoditized industry like the shipping industry, capacity is an important metric that directly impacts companies’ top line, or revenue performance. When capacity grows faster than demand, competition will rise among individual shipping firms as they try to utilize idle ships and cover fixed costs. This will lower day rates, which will negatively […]

The year 2013 was characterized by significant expansion of Diana Shipping Inc.’s (DSX) fleet, as the dry bulk shipping industry turned a corner.

Managers remain optimistic From September 13 to 20, ship orders for Capesize vessels fell by 0.25%, from 10.53% to 10.28%, as a share of the existing number of ships. Orders for Panamax improved from 15.34% of existing ships to 15.87%, while those for Supramax were up slightly, rising 0.04% to 4.64%. Analysts use a percent […]

Dividend yield for Navios Maritime Partners currently stands at 15.8% with the company recently paying a dividend of $0.4425 per common unit.

Taking out 2012’s high is important because it reflects tighter supply and demand dynamics than last year, which means higher revenue and earnings from Capesize vessels this year compared to 2012.

While Navios Maritime Partners (NMM) is less sensitive to shipping cycles because of its longer-term contracts and staged expirations, it’s still subject to market rates when contracts roll over.

China imports almost 60% of the world’s seaborne iron ore while its coal trade accounts for almost a quarter of the global trade.

Investors can look forward to higher Capesize rates during the second half of this year compared to the first half, which is positive for dry bulk shippers.

China accounts for a major share of dry bulk commodities’ imports and exports. In the past three months, the Guggenheim Shipping ETF (SEA) dropped 6.1%.

From August 23 to 30, shipping rates for Panamax, Supramax, and Capesize vessels stood relatively unchanged.

China’s iron ore import data China’s iron ore import is a key driver of shipping demand, making up more than 75% of the world’s total iron ore shipments. So China’s import rising is positive for shipping rates—Capesize vessels in particular—which can give short-term support to share prices and a medium-term boost to companies’ financials. While […]

Update to Must-know: Shipping companies hit by China’s financial woes The impact of China’s financial industry The financial industry is an essential part of any economy. Without a stable financial system—one that supplies liquidity to businesses and individuals and bridges the gap between savers and borrowers—an economy can’t function as efficiently and productively as it […]

China’s steel output China’s steel output is a leading indicator of iron ore and coal demand. When steel output declines, the fall is often due to adjustments to weaker demand. As China makes up 70% of the world’s total iron ore imports, lower steel output will translate to fewer iron ore imports. This will hurt […]

The impact of China’s financial industry The financial industry is an essential part of an economy. Without a stable financial system—one that supplies liquidity to businesses and individuals and bridges the gap between savers and borrowers—an economy can’t function as efficiently and productively as it could. So, a collapse in the financial industry would grind […]

Why is capacity important? Capacity is an important factor that directly impacts companies’ top line (revenue) in a highly commoditized industry, like shipping. When capacity grows faster than what’s demanded, competition rises among individual shipping firms as they try to use idle ships and cover fixed costs. This lowers day rates, which negatively affects bottom […]

The impact of China’s financial industry The financial industry is an essential part of any economy. Without a stable financial system—one that supplies liquidity to businesses and individuals and bridges the gap between savers and borrowers—an economy can’t function as efficiently and productively as it could. So, a collapse in China’s financial industry would grind […]

It’s been a while since the dry bulk shipping index has had such as large impact on the share prices of shipping companies. This reflects the fact that the market wasn’t really expecting such an increase.

Diana Shipping is proactively investing in vessels to take advantage of the current low point for vessel valuation, and it can most likely outlast a prolonged downturn. So its valuation appears more or less full.

Investors seeking exposure to dry bulk shipping who don’t want to buy six companies like Soros did can use the Guggenheim Shipping ETF (SEA).

Because the month-to-month data can contain short-term statistical noise that doesn’t reflect long-term fundamental changes, a six-month change or year-over-year change is often used.

Dry bulk shipping companies lag behind economic recovery Despite the U.S. stock market surpassing its 2008 highs recently, with the Dow Jones Industrial Index hitting 15,464.30 and S&P 500 hitting 1,680.19 as of July 12, 2013, dry bulk shipping companies have done poorly. These companies primarily transport raw materials such as iron ore, coal, and […]

The Baltic Dry Index measures the cost of major raw materials. The raw materials are transported by sea in the global economy. It indicates a strict demand supply price situation.

The two main markets for shipping companies, such as DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Navios Maritime Partners LP (NMM) and Safe Bulkers Inc. (SB), are spot (voyage) and time charter (period). Companies that engage in the spot market will charge a one-time fee that customers pay to have a certain amount of goods […]

China’s power consumption in August was 502.5 billion kilowatt hours (or kWh). This was a decline of 1.5% from the levels last year.

In a highly commoditized industry, like the shipping industry, capacity is an important metric that directly impacts companies’ top line, or revenue performance. When capacity grows faster than demand, competition will rise among individual shipping firms as they try to utilize idle ships and cover fixed costs. This will lower day rates, which will negatively […]

Ship orders apply most to long-term investments Ship orders reflect managers’ assessments of the industry’s future demand and supply balance. Dry bulk shipping companies will often place new orders when future demand is expected to increase more than supply, on the condition that they expect to generate profits with new vessels.[1. Dry bulk shipping companies […]

The dry bulk shipping industry’s service is commoditized. So, supply and demand balance is one of the most important drivers for dry bulk companies’ top- and bottom-line performances.

Why should you watch ship purchase prices? Purchase prices for ships are often good indicators of financial health in the shipping industry. When shipping demand grows more than the supply of ships, shipping companies place additional orders, which drives up purchase prices. Additionally, when firms are able to charge higher prices for transporting goods across […]

Supply and demand drives dry bulk shipping companies Unlike imports data that aren’t widely available on a weekly basis, shipping rates (which reflect the difference in supply and demand) are collected daily at the London-based Baltic Exchange and published as the BDI (Baltic Dry Indexes). These indexes reflect the daily shipping rates to transport key […]

The Baltic Exchange Dry Bulk Index (BDIY) is a composite of rates for different ship sizes factoring in the average daily earnings of capsize, panama, supramax, and handysize dry bulk transport vessels.

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.

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.

The impact of China’s financial industry The financial industry is an essential part of any economy. Without a stable financial system—one that supplies liquidity to businesses and individuals and bridges the gap between savers and borrowers—an economy can’t function as efficiently and productively as it could. So a collapse in China’s financial industry would grind […]

The BDI (Baltic Dry Index) is a widely followed metric that reflects the overall rates of moving dry bulk cargoes like iron ore, coal, and grain across water.

Valuations can often tell investors the outlook of equities in the near future. Although value investors often look for valuations that are low, high valuations can often signal better times ahead. This is especially true for cyclical companies, such as steel producers and shipping companies, as has been mentioned by Peter Lynch in his famous […]

Numerous factors like world economic growth and commodity supply and demand affect the dry bulk shipping industry.

The price of a Panamax ship depends on two factors: the amount of cash the ship can generate within its useful life and the cost of steel.

NAV (net asset value) is a valuation method under which a company’s value is equal to the difference between its assets and liabilities.

Diana Shipping’s investment strategy is to preserve the strength and integrity of its balance sheet and gradually increase its leverage as asset values weaken.

Valuations can often tell investors the outlook of equities in the near future. Although value investors often look for valuations that are low, high valuations can often signal better times ahead. This is especially true for cyclical companies, such as steel producers and shipping companies, as has been mentioned by Peter Lynch in his famous […]

Ship orders reflect managers’ assessments of the industry’s future demand and supply balance. Dry bulk shipping companies will often place new orders when future demand is expected to increase more than supply, on the condition that they expect to generate profits with new vessels.[1. Dry bulk shipping companies engage in the transportation of dry raw […]

Continued from Part 9 Why should you watch ship purchase prices? Purchase prices for ships are often good indicators of financial health in the shipping industry. When shipping demand grows more than the supply of ships, shipping companies place additional orders, which drives up purchase prices. Plus, when firms are able to charge higher prices […]

China’s steel production mills are reluctant to reduce output for fear credit could be cut off and market share captured by rival producers.

Despite a decline in fuel prices, the Baltic Dry Index has recorded an approximate 40% drop since the start of November and a 62% decline year-to-date.

SB has paid six additional new eco-design newbuild vessels on order.

DryShips expects that iron ore production will increase in the next three years, which will increase the demand for transportation.

Continued from Part 1 The importance of ship orders One measure that reflects managers’ expectation of future supply and demand differences is the number of ships on order. When managers expect future supply to increase more than demand, they refrain from purchasing new ships. However, when they expect demand to outpace supply growth, companies return to […]

Because China is the largest importer of raw material in the world, China’s manufacturing is a key driver that affects shipping demand and rates.

Navios Maritime Partners has a modern, diverse fleet of 32 vessels with 3.3 million DWT and an average age of 7.5 years for its combined fleet.

DryShips notes that it has significant leverage in the dry bulk and tanker spot markets. So, positive developments in these sectors will result in substantial cash flow to its bottom line.

Coal trade saw significant changes over the past few years. China was a net coal exporter in 2009—only five years ago. Today, it’s the world’s largest importer.

It’s times like this, when nobody is saying anything, that investors are slowly building positions and advancing like silent troops in the night.

With good shipyards fully booked until 2016 and beyond, based on CEOs’ inputs, investors should view the current trend as a medium-to-long-term positive.

The importance of ships under construction Ship orders reflect managers’ expectations for future supply and demand differentials. But new ship orders don’t always translate into new constructions right away. Sometimes shipping firms specify a particular date of delivery for the new orders. If the delivery date is farther out, ship construction firms will delay work. […]

Why is capacity important? Analysts evaluate capacity growth to see whether it will exceed demand growth, instead of solely relying on indicators such as ship orders and ship prices that reflect managers’ perspective of future supply and demand dynamics. When capacity grows faster than demand, competition rises among individual shipping firms as they try to […]

Managers remain optimistic From September 27 to October 4, ship orders for Capesize vessels fell slightly from 10.34% to 10.32%, after rising from 10.28% on September 20. Supramax vessels also registered a decline from 4.66% to 4.59% over the same period, while orders for Panamax vessels surged ahead from 16.04% to 16.64%. Analysts use a […]

Annual capacity growth remains positively in a downtrend From September 27 to October 4, year-over-year growth in dry bulk capacity, measured in deadweight tonnage (DWT, the weight a ship can safely carry across the ocean) and published weekly by IHS Global Limited for Capesize vessels fell from 4.70% to 4.63%. Year-over-year growth for Supramax vessels […]

The significance of vessel values The prices of new builds are useful indicators that reflect the dry bulk shipping industry’s future fundamental outlook. New prices often rise because of higher orders for ships. Usually, this is the result of managements’ speculation that future shipping rates (which can increase or stay the same from the current […]

For new investors, the government shutdown crisis could be a great opportunity if the long-term fundamental outlook remains positive for shipping.

Iron ore inventory Iron ore inventory at Chinese ports can be an important factor that affects shipping rates, since it reflects the safety net and the imbalance between iron ore supply and steel mill demand. When inventory levels are high, they reflect possible over-purchases by importers, which may prompt importers to cut back on imports […]

What new build prices reflect The prices of new builds are useful indicators that reflect the dry bulk shipping industry’s future fundamental outlook. New prices often rise because of higher orders for ships. Usually, this is the result of managements’ speculation that future shipping rates (which can increase or stay the same from the current […]

The significance of second-hand ship values The prices of older vessels are another indicator that reflects the fundamentals of shipping companies. Because these vessels are sold and bought in the secondary market, it doesn’t take as long for the buyer to receive these vessels. So price movements in older vessels often reflect nearer-term fundamental outlook […]

Stabilizing construction activity means managers are expecting rates to recover to adequate levels that can generate good returns for existing constructions soon.

On August 30, the number of ships under construction as a share of existing vessels held steady from the previous week, based on four weeks of data to smooth out short-term noise.

With construction levels falling, it’s just a matter of time until capacity growth falls even further, especially for Panamax and Supramax ships.

There are two main types of contracts in the dry bulk shipping industry, spot charter contracts and time charter contracts.

This series covers key suppliers of various commodities in the seaborne market as well as indicators pertaining to economic and industry fundamentals.

Angeliki Frangou has been Navios Maritime Holdings Inc.’s chairman and CEO since August 25, 2005.

Shipping rates are subject to seasonal factors and can be volatile. To overcome that problem, investors should follow new build prices.

The combination of high fixed costs and variations in shipping rates are two factors that make industrial companies more volatile.

In regards to the management agreement, TMS Bulkers is entitled to a fixed management fee of $2,069 per vessel, per day, payable in equal monthly installments in advance.

As compared to its earlier periods, DryShips’ (DRYS) value to loan compliance situation has improved significantly.

In trading, the Baltic Dry Index declined to 850 on June 30, 2014, from 934 at the beginning from the month.

For the first quarter of 2014, Navios Maritime Partners’ revenue rose 14.4% year-over-year to $57.5 million, led by vessel acquisitions.

China’s official PMI For the month of March, China’s official PMI (purchasing managers’ index) inched up to 50.3 as compared to 50.2 recorded in February, allaying fears of slowdown in the world’s second largest economy and a key driver of dry bulk shipping stocks such as DryShips Inc. (DRYS), Navios Maritime Holdings Inc. (NM), Diana […]

As a major producer and exporter of oil, gas, and minerals (including gold, nickel, copper, tin, and thermal coal), Indonesia’s exports account for a significant share of Indonesia’s GDP.

George Economou appears to have an empire of several kinds of shipping companies as well, including container ships and drill ships.

The companies that Soros bought are some of the largest publicly traded dry bulk shipping companies in the world.

Valuations and outlook Sometimes, instead of looking at what’s happening within the shipping industry, investors may gather more important insight by looking at how customers are doing—using steel producers. One quick way to find out the future outlook of a cyclical industry like steel is to look at how the valuations and share prices of […]

The significance of scrapping level and shipping rates While shipping scrappage activity does affect supply, it’s best suited to get an immediate to medium-term assessment of supply and demand dynamics (depending on how you slice and dice it). The rate at which companies scrap ships often reveals whether the dry bulk shipping industry is facing excess […]

Why is the real estate climate index important? China’s real estate activity has a significant influence on dry bulk shippers, as it uses a lot of steel. One indicator that reflects this activity is the Real Estate Climate Index. The National Bureau of Statistics developed the index to capture the trends and situation in the […]

Shipping indexes (rates) haven’t lost momentum despite analysts’ cautions. Shipping companies’ long-term outlook remains positive.

Annual capacity growth remains positively in a downtrend From September 13 to 20, year-over-year growth in dry bulk capacity, measured in deadweight tonnage (DWT, the weight a ship can safely carry across the ocean) and published weekly by IHS Global Limited, for Capesize vessels dropped from 5.26% to 4.00%. This is the lowest level in […]

The relationship between commodity prices and shipping rates Commodity prices generally move together with shipping rates. When prices for materials such as steel, iron ore, coal, oil, and copper rise, it’s often due to higher growth in demand than supply. This also means higher shipments, which have a positive effect on shipping rates. So, when commodity prices […]

There’s much debate over whether capacity will grow faster than demand this year. It’s difficult to say, since it depends on a variety of fluctuating factors.

Golden Ocean Group, an international dry bulk shipping company controlled by the shipping billionaire John Fredriksen, had reported improved profits of $43.5 million for the second quarter.

Dry bulk shipping demand is highly dependent on the global economy. One great tool that money managers and policymakers rely on to assess short to medium-term economic outlook is the composite leading indicator published by the OECD (Organization for Economic Co-operation and Development). The components of the composite leading indicators differ from one country another, […]

On a weekly basis, vessel prices indicate the current trading prices of Capesize, Panamax, Supramax, and Handymax vessels. They also indicate the weekly changes.

Given the country’s current economic situation, economic growth and coal demand could fall short.

Although the U.S. market has been falling over the past few weeks, and it may continue to fall further, it’s important to know that dry bulk shippers don’t exactly follow the U.S. market.

The Baltic Dry Index, or BDI, measures the price of transporting dry bulk. It’s a combination of rates for different ship sizes.

China’s crude steel production is a key indicator that dry bulk shipping investors should watch. This is mainly due to iron ore primarily being used to manufacture steel.

An indicator to gauge bulk vessels’ fundamental prospects, ship prices include newbuild vessel prices and second-hand vessel prices.

The National Bureau of Statistics revealed that the December crude steel output in China increased 7.6% to 68.09 million tonnes. Steel output was up 1.5% YoY.

For 2014, the total coal imports were 291.22 million tonnes—compared to 327.1 million tonnes in 2013. This was after many years of double-digit growth.

Shipping rates are driven by supply and demand: tighter supply results in higher rates, while looser supply and demand balance leads to lower rates.