Safe Bulkers Inc

Due to NMM’s increasing spot rate exposure and older fleet, NAV (net asset value) is the best metric to get a sense of the company’s floor valuation.

Navios Maritime Partners’ adjusted NAV (net asset value) shows that it is currently trading at a 46% discount to its NAV.

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

Since releasing its 3Q15 results on November 3, 2015, Navios Maritime Partners (NMM) has fallen by 71%.

Time charter rates for dry bulk vessels have fallen considerably over the last few months. Capesize one-year rates have fallen by 40% in the last three months to $7,750 per day.

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.

Navios Maritime Partners (NMM) cut dividends by 52% in its 3Q15 results given the weak outlook for the dry bulk industry. But even after a cut, it’s boasting of a yield of 30%+.

Since the market isn’t showing encouraging signs of a significant pickup next year, dry bulk companies might need to weather a prolonged downturn and manage their liquidity prudently.

Scorpio Bulkers (SALT) has the lowest financial leverage with debt-to-assets of 31.8% and debt-to-equity of 42.6% as of September 30, 2015. But this doesn’t give the full picture.

Navios Maritime Partners (NMM) and Diana Shipping (DSX) have a chartering strategy to charter the bulk of their vessels for the long term, thus holding high fixed-rate exposure.

In the current scenario of a weak dry bulk market, companies with lower operating expenses are preferred, since pressure on revenues makes operating leverages work negatively.

Scorpio Bulkers held an IPO in December 2013 and started to focus on only newbuild fleet. That’s the reason it has the youngest dry bulk vessel fleet with an average age of just 0.4 years.

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

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.

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.

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.

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.

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

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 BDI (Baltic Dry Index) is a leading indicator for the bulk shipping industry. It rose for nine consecutive days to reach a level of 779 on June 19.

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.

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.

On a month-over-month basis, iron ore exports to China from Port Hedland increased marginally to 30.25 million tons in February 2015.

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.

In 2014, China coal imports dipped year-over-year for the first time in six years. Imports fell 10.9% to 291.6 million tonnes.

China’s iron ore imports declined for the second straight month in February 2015, down 13.5% to 67.94 million tonnes over January 2015.

Just before the release of the official PMI data, the central bank in China cut interest rates by 0.25 percentage points.

Seasonality in Brazilian iron ore exports may improve the pace of shipments for the rest of 2015 and possibly buoy Capesize rates.

Like the cost of newbuilds, secondhand vessel prices are also on the slide. Five-year old Capesize prices dropped to $33.1 million in February 2015.

In this series, we’ll look at some of the important metrics that drive the dry bulk shipping industry such as the price of commodities.

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.

In 2014, the newbuilding orderbook for dry bulk carriers reported 746 orders—145 Panamax vessels, 132 Capesize vessels, and 19 VLCCs.

Coal stockpiles reached 8 million tons. The continued rise may negatively impact the near-term coal import prospects.

According to Diana Shipping’s (DSX) management, world crude steel production reached 1.66 billion metric tons in 2014. It was up by 1.2% compared to 2013.

Diana Shipping is a global shipping company. It specializes in dry bulk vessel ownership. It reported the results of its 4Q earnings on March 4, 2015.

DryShips (DRYS) commented that its total dry bulk fleet’s compound annual growth rate for 2005 to 2014 stood at 9.1%. Its fleet increased by 4.4% in 2014.

World Maritime News comments that it expects a fundamental and sustainable dry bulk market recovery in the second half of 2015 and throughout 2016.

In this series, we’ll discuss DryShips’ fourth-quarter earnings in detail and the company’s 2015 outlook. We’ll also analyze the company’s strategy.

In 2014, Chinese iron ore imports were up 14% YoY. Domestic iron ore production only increased by 5%. There are planned expansions for global iron ore mines.

In 2015, the net fleet growth is forecast to be below 4%. The forecast is lower than last year. It’s expected to be lower than the demand growth.

History reveals that increases in world GDP growth generally led to increases in marine transportation rates. Since June 2014, crude oil prices fell 50%.

Navios Maritime Holdings (NM) is a global seaborne shipping and logistics company. It’s focused on the transport and transshipment of dry bulk commodities.

The dry bulk industry is broadly affected by factors like global economic growth, which positively correlates with raw material consumption.

In 2014, China’s coal imports recorded their first year-over-year dip in six years. Imports dropped 10.9% to 291.2 million tonnes.

Shipments through Port Hedland represented 55% of Australia’s iron ore exports last year, and more than 80% of cargoes go to China.

China’s official purchasing managers’ index (or PMI) declined to 49.8 in January 2015 from its December 2014 levels of 50.1.

To date in 2015, the Guggenheim Shipping ETF, an index weighted with dry bulk shipping companies, increased 1.3%, while the Baltic Dry Index declined 28.3%.

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.

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.

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

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

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%.

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.

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

Since its IPO in May 2007, Navios has grown its distribution by 26.4% and its fleet capacity by over 400%.

Since Navios Maritime Partners (NMM) reported its earnings, the stock has dipped 28.3%, touching its 52-week low of $9.67 on December 15.

Vessel prices are very close to bottom levels that occurred back in the period from December 2012 to January 2013.

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

Brazil is the second largest iron ore exporting country, accounting for almost 25% of market share.

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.

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

Looking ahead, many factors are likely to positively influence the shipping market and the companies that play in it. For example, India’s increasing appetite for coal has caused Capesize and Panamax rates to surge by 94% and 49%, respectively.

Orderbooks of Suezmax and Aframax fleets remain at manageable levels, with the majority of new orders due for delivery in the second half of 2016 or later.

George Economou, the company’s chairman, president, and chief executive officer, purchased $80 million, or 57.1 million shares of common stock at the public offering price. With this purchase, Economou increased his ownership in DryShips to 16.9%.

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.

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

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.

Newbuilds versus second-hand vessel values Second-hand vessels are characterized by faster deliveries, so they reflect short-to-medium term fundamentals. Second-hand vessel prices tend to be more responsive to changes in current rates compared to newbuilds, which are affect by changes from industry turnarounds. On the contrary, buyers and sellers of newbuilds have to wait for almost two years […]

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

Ship orders’ importance Orderbook is an indicator that investors can track for the longer run, as dry bulk ships generally take one or two years to construct. Managers’ expectations of future supply and demand differences reflect in the number of ships they order. Rising and falling ship orders indicate the different market scenarios. When managers refrain from purchasing […]

Growing construction activity in the global arena leads to significant demand for iron ore and coking coal, which expands the seaborne trade of these dry bulk commodities.

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.

For the rest 2014 and beyond, China’s continued development in urbanization is expected to contribute significantly to steel consumption.

Navios Maritime Partners’ (NMM) management commented that based on the normalized nine-month period in 2014, the company’s actual coverage is 1.2x.

NMM has multiple ways to grow its fleet size and distributions. Since its initial public offering (or IPO) in May 2007, the company grew its distribution by 26.4%.

NMM recorded an increase of $1.8 million in its EBITDA to $37.5 million for the three-month period ending September 30, 2014—compared to $35.6 million for the same period in 2013.

Second-hand vessel values were led by quicker deliveries. Price movements in second-hand vessels tend to reflect industry participants’ expectations for medium-term fundamentals.

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.

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.

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.

What Ship Finance paid for the nine ships is only a fraction of construction costs and just marginally higher than current scrap values.

For the first seven months of 2014, 30.6 million deadweight tonnes (DWT) were actually delivered versus the projection of 47.6 million DWT. The non-delivery rate through July was about 36%.

In the past few years, the coal industry has undergone significant changes. China has become the world’s biggest importer of coal, formerly a net exporter of coal in 2009.

Navios Logistics is one of the largest logistics companies in the Hidrovia region of South America and the cabotage trades along the eastern coast of South America.

Navios Maritime Holdings (NM) chairwoman and chief executive Angeliki Frangou once again commented that the company has created a significant competitive advantage through its in-house technical and commercial management.

Navios Maritime Holdings’ (NM) low daily cash break-even rate allows the company to enjoy significant cash flow regardless of whether the market returns to historical norms.

For the second quarter of 2014, Navios Maritime Holdings (NM) recorded revenue of $145.4 million compared to $125.6 million in the corresponding quarter a year ago

Two main drivers suggest investments in renewable energies, nuclear power, and natural gas can be expected to take on greater importance for China.

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

When import levels of iron ore and coal imports are up in China, demand is high and shipping rates rise.

The stimulus measures introduced by China follow a string of weak economic data released in August. With higher credit available, China’s big banks are expected to channel funds into areas of economic importance.

DRYS has received firm commitments for a total of up to $520 million from ABN AMRO and Nordea Bank. This is the first major milestone towards the refinancing of the company’s 5% convertible notes maturing in December.

There’s no denying that debt is DryShips’ main concern going forward. The company’s debt stood at a total of $6 billion at the end of the first quarter, up around $500 million quarter-over-quarter.

Formed in September 2004, DryShips Inc. (DRYS) is a global shipping transportation company. It offers ocean transportation services for dry bulk cargoes and crude oil worldwide.