Guggenheim Shipping ETF
Scorpio Tankers’ shares in Dorian to be registered for resale
Dorian will be registering for resale, under the Securities Act of 1933 as amended, all the Dorian shares that Scorpio Tankers (STNG) owns. Scorpio Tankers currently owns approximately 9.4 million shares, or 16.3%, of Dorian.
Must-know: Why products supplied are increasing
For the week ending October 3, 2014, total products supplied were 19 million barrels per day (or bpd)—compared to 18.6 million bpd in the first week of September.
Why current secondhand oil tanker values suggest a mixed outlook
While the VLCC data is positive, the picture for the crude tanker business remains mixed. This could portray a short-to-medium-term negative outlook.
Why a pullback in orders is normal in a dry bulk shipping upcycle
On November 1, ship orders for all key dry bulk vessel classes fell. Ship orders reflect managers’ expectations of future supply and demand differences.
Scorpio Tankers adopts a shift in charter mix
For the third quarter of 2014, the charter hire expense increased $1.1 million to $32.9 million, from $31.9 million in the year ago quarter.
China’s key economic conditions: Industrial and electricity output
Because reporting entities sometimes like to dress their numbers up a bit to look nice, analysts also look at electricity output—where government officials say they don’t have much incentive to cook the numbers.
Why China’s iron ore port inventory is marginally higher
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).
Current positive data shows supply to grow below 7% in 2013
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 […]
Chinese investing in cars and real estate drives dry bulk demand
As long as developers continue to snatch up land, more iron ore and coal will be needed at steel mills, which is generally positive for dry bulk shippers.
Why Diana kept buying after its fleet capacity grew 23.75% in 2013
The year 2013 was characterized by significant expansion of Diana Shipping Inc.’s (DSX) fleet, as the dry bulk shipping industry turned a corner.
Despite dividends, Navios is still unattractive to many investors
Dividend yield for Navios Maritime Partners currently stands at 15.8% with the company recently paying a dividend of $0.4425 per common unit.
Why 5- and 10-year Very Large Crude Carrier prices are consistent
Five-year-old VLCC prices remained consistent, at $75 million, with the previous month’s levels. Year-over-year prices increased by 36%. Ten-year-old VLCC prices stood unchanged at $48 million and increased by 41.2% year-over-year.
Capesize rates take out 2012 high, a key driver of share prices
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.
Newbuild tanker prices rose, but you should still use caution
October’s increase is generally positive for the long-term prospects of tanker stocks like Frontline ltd. (FRO) or Nordic American Tanker Ltd. (NAT).
Why can Navios Partners give out higher distributions?
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.
Weekly tanker digest: Have fundamentals changed? (Part 4)
Continued from Part 3 The importance of capacity Capacity, in a commoditized industry like shipping, 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 use idle ships and cover fixed costs. This will lower day […]
Why China’s iron ore and coal imports declined
China imports almost 60% of the world’s seaborne iron ore while its coal trade accounts for almost a quarter of the global trade.
Gener8 Maritime Partners: Fourth-Best Performer in 2018
Gener8 Maritime Partners’ YTD returns were -10% as of April 5, 2018. Gener8 Maritime Partners is the fourth-best performer among its peers YTD.
Dry bulk shipping industry players and performance
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%.
Why 15-year ship prices point to negative outlook for tanker stocks and earnings
Why ship prices (value) matter Ship prices (values) 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 of ships, which drives up purchase prices. Additionally, when firms are able to charge higher prices for transporting goods across the […]
The Baltic Dry Index fell in January but annual growth is positive
The Baltic Dry Index (a benchmark that reflects the overall shipping rate for transporting dry bulks such as iron ore, coal, and grain across the ocean) has fallen quite a bit since the start of the year.
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 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 a high cash breakeven cost is risky for Frontline
The cash breakeven costs are the daily rates of Frontline’s (or FRO) vessels. They have to earn the rates to cover budgeted operating costs and dry dock, estimated interest expense, payable at hire, and corporate overhead costs.
7 points that reflect tanker fundamentals say recovery isn’t looming (Part 4)
Continued from Part 3 The importance of capacity Capacity, in a commoditized industry like shipping, 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 use idle ships and cover fixed costs. This will lower […]
An ETF that invests in Soros’s dry bulk shipping experiment
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).
US oil production expected to hit record in 2013, negative for tankers
US oil rig count is a leading indicator of US oil production and oil imports. Since 2008, a boom in US oil industry has negatively impacted demand for tankers (see Tankers will likely underperform dry bulk ships in 2013)— vessels that transport oil across ocean. Higher US oil production, due to application of technologies called […]
Why the OECD leading indicator drives dry bulk shipping cycles
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.
Egypt tension pushes oil past $109, shipping rates rise, but downside for tankers
Tanker stocks tied to oil prices Tanker stocks often move in tandem with oil prices in a demand-driven market. But because tanker companies also use oil to run their ships, a price increase in oil due to supply shocks (such as political disruptions in the Middle East) also affects tanker firms differently. To get a […]
Why the Baltic Dry Index is decreasing
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.
Maturing contracts present significant downside for certain shipping firms
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 thermal power output recorded a downfall
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.
Capacity growth portrays short-term negative but long-term positive for shipping
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 […]
Why Frontline is on the verge of bankruptcy
Industry analysts suggest that investors should avoid Frontline because of the bankruptcy risk. Currently, the company is facing bankruptcy. This is led by the $190 million bond that’s due in April 2015.
Recommendation: Capitalize on dry bulk shipping’s cyclical waves
The dry bulk shipping industry is cyclical mainly due to economic or business cycles as well as a long lead time between the placement of orders and the delivery of new vessels.
Shipping recovery continues with additional purchases, long-term opportunity
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 […]
Why high shipping capacity growth will continue to pressure tanker earnings
Update to Shipping capacity growth drops but outpaces demand, negative for tanker stocks The importance of capacity 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 […]
Must-know: Baltic Dry Index bouncing from its 52-week low
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.
Must-know: Why the crude tanker orderbook is expanding
In order to assess the industry’s fundamental outlook, managers use the oil tanker orderbook. It’s an important yardstick. It includes the number of ships that have been ordered and the number of ships under construction. A rising orderbook usually suggests that oil tankers have a better expectation for future supply and demand dynamics.
Why the flat oil rig count won’t hinder product tanker demand
US rotatory rig count: The forefront of future oil production The US Crude Oil Rotary Rig Count is a valuable indicator that shows how much drilling activity is occurring in the United States, tracking the number of rotating drills that are drilling into the Earth’s crust in search of oil or developing oil wells. The […]
Tankships seeks to expand its fleet size through acquisitions
Tankships seeks to expand its fleet size through timely and selective acquisitions of additional secondhand modern tankers and the available optional vessels.
Dry bulk opportunity: The Baltic Dry Index might have bottomed
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.
Why the dry bulk shipping industry is weakening
Numerous factors like world economic growth and commodity supply and demand affect the dry bulk shipping industry.
Must-read: Financial woe abroad drags tankers down, outlook negative
Continued from Why oil price is a key driver of tanker stocks 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 […]
Panamax vessel price reveals low dry bulk orders, negative implication
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.
Weekly tanker digest: Have fundamentals changed? (Part 2)
Continued from Part 1 The significance of ship orders One measure that reflects managers’ assessment of future supply and demand differences is the number of ships on order. When managers expect future demand to increase more than supply, if they also expect to generate profits with the investment, they will often place new ship orders. But […]
Why Canadian crude exports to the US are on a high
According to the U.S. Energy Information Administration (or EIA), for the week ending September 12, 2014, U.S. crude oil imports from Canada hit a record high of 2.99 million barrels per day (or bpd). This was a 20% increase from the same period last year. Meanwhile, the four-week average on September 12 was 2.93 million bpd.
Outlook for global growth and tanker fleet for Teekay Tankers
Looking ahead to 2015, Teekay Tankers Ltd. (TNK) forecasts 2.0% net global tanker fleet growth with major contribution from the product tanker sector. There is a negative fleet growth estimate for the Suezmax and uncoated Aframax sectors.
Divergence in steel multiples and share prices spell positive shipping outlook
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 […]
Shipping industry recovery is real, but timing remains uncertain
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 […]
Why the Baltic Dirty Tanker Index going south
Analysts and money managers follow the Baltic Dirty Tanker Index (or BDTI). They follow the Index to assess the crude oil shipping industry’s revenue and earnings potential. The Baltic Dirty Tanker Index decreased to 699 on August 29, 2014. It was 826 at the beginning of the month.
Weekly product tanker capacity growth rises, crude tanker falls
While annual capacity growth still remains above 3.5% for crude tankers and even higher for product tankers, it has come down since April, which is a positive sign.
Frontline has options, but they’ll likely put the company behind
There are several things Frontline can do to pay its maturing $190 million bonds. But activities such as selling assets or raising additional capital would likely put Frontline behind its peers.
Must know: China’s crude steel production edging upwards
China’s steel production mills are reluctant to reduce output for fear credit could be cut off and market share captured by rival producers.
Key tanker stock drivers: China’s crude oil import volume
China’s crude oil import: The most important factor An indicator that has a first-degree (direct) influence on tanker rates is China’s crude oil import volume. When import volume rises, more tankers will be in use, which pushes up shipping rates. Conversely, lower import volume means an increased number of idled ships, which leads to increased […]
Crude tanker index 25% lower, product tanker index steady
On August 30, the Baltic Dirty Tanker Index and Baltic Clean Tanker Index stood at 622 and 604, respectively.
Overview: Maintaining a perfect, modern, and young fleet size
SB has paid six additional new eco-design newbuild vessels on order.
Star Bulk comments on coal and grain
Star Bulk believes the recent coal import restrictions were minimal, while the freight rate agreement signing between Australia and China can be a positive development.
Why the fundamental stock analysis is positive for the future
DryShips expects that iron ore production will increase in the next three years, which will increase the demand for transportation.
Why Teekay Tankers has high liquidity and leverage ratios
With TK evolving from a small player to global marine midstream service provider, the company has garnered significant advantages and a strong standing in the industry.
Euronav: Third-Best Performer among Crude Tanker Stocks
Euronav’s (EURN) YTD (year-to-date) returns were -9.2% as of April 5, 2018. Euronav is the third-best performer among its peers on a YTD basis.
Why declining time charter rates dented revenue
During the quarter, Safe Bulkers operated 31 vessels with a time charter equivalent rate of $11,642—compared to 26 vessels with time charter equivalent rate of $17,116 during 2Q13. The weighted average time charter equivalent of the Baltic Panamax (or BPI) and Baltic Capesize (or BCI) indices stood at $6,846 for 2Q14.
Must-know: Why the U.S. could hit a light crude oil refining wall
While U.S. oil imports have been falling over the last few years, tanker companies could benefit from a brighter outlook on U.S. oil imports in 2014.
Why we could see fewer volatile swings in dry bulk shipping stocks
The recent volatility we’ve seen among dry bulk shippers can scare people into thinking they should trade in and out of the stock.
Why Capital Product Partners didn’t rally after beating estimates 400%
Beating estimates Let’s begin with earnings since that’s often what analysts and investors look at. For the third quarter of 2013, which was released on October 31 in the morning, CPLP reported basic EPS of $0.35 per share, which was five times more than the estimate of $0.07 per share. Basic EPS of $0.35 a […]
U.S. oil production could slow in 2014, benefiting crude tankers
As oil production appears to be lagging oil rig count by two to three years, U.S. oil production growth could start to show signs of slowing in 2014. That could be positive for demand for crude tanker companies.
Why maturing contracts are a risk to Navios Maritime Partners
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.
Depreciation expense increases; Star Bulk addresses capex fund
Star Bulk’s depreciation and interest costs Star Bulk Carriers Corp.’s (SBLK) depreciation expense increased to $10.7 million for the third quarter of 2014, compared to $4.0 million for the third quarter of 2013. The increase was due to the increase in the company’s average number of vessels in its fleet and the corresponding increase in […]
What is Star Bulk’s vessel financing status?
Due to rapid expansion, Star Bulk’s financing levels are higher compared to its industry peers.
Changes in Star Bulk’s management fees and operating and net income
Star Bulk’s management fee income is at $0.3 million compared to $0.5 million for 3Q13, due mainly to a decrease in the number of vessels under management.
Star Bulk’s liquidity and cash flow
This part covers Star Bulk’s cash flow numbers given the company’s rapid expansion of its fleet size through acquisitions and other related developments.
Dry bulk trade demands Star Bulk dynamics
Star Bulk management stated that commodity demand remains healthy, while substantial supply expansion has resulted in surpluses across various commodity markets.
Newbuild prices record marginal change
Newbuild VLCC (very large crude carrier) prices for the month of November 2014 decreased to $97.7 million compared to $98.1 million in October 2014.
Overview: Star Bulk Carriers’ earnings and fleet
Star Bulk Carriers’ fleet includes 52 operating vessels, 16 second-hand vessels yet to be delivered, and 35 newbuilding vessels still under construction.
Perfect timing for Star Bulk’s fleet acquisition
Star Bulk merged with Ocean Bulk in July, right after the high price levels of March weakened. It took advantage of even lower vessel prices in its Excel acquisition in August.
A review of Frontline and its fleet
Frontline Ltd. (FRO) is engaged mainly in the ownership or operation of oil tankers used to transport crude oil. It’s owned by Norwegian shipping magnate John Fredriksen.
Frontline comments on global shipping industry
Frontline recorded better vessel earnings compared to the second quarter. Improved fleet utilization was due to increased travel distance driven by crude moving from the Atlantic Basin to China.
Five-year and ten-year VLCC prices increase
With faster deliveries and employment of vessels, secondhand vessels tend to reflect industry participants’ expectations for medium-term fundamentals.
New buyback program approved by Scorpio Tankers
On July 28, 2014, the board of directors of Scorpio Tankers (STNG) approved a new stock buyback program with authorization to purchase up to $150 million of its common stock.
DryShips improves its time charter equivalent and outlook
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.
Baltic Dirty Tanker Index gains on rising Chinese imports
The Baltic Dirty Tanker Index interests analysts and money managers. They use it to assess the revenue and earnings potential of the crude oil shipping industry.
5-year-old and 10-year-old VLCC prices stay at consistent levels
Since secondhand vessels can be delivered within a few months, they tend to reflect industry participants’ expectations for medium-term fundamentals and rates, unlike newbuilds, for which two years of delivery time is mandatory.
Why China’s coal and grain trade increased
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.
Star Bulk could become largest U.S. dry bulk shipping company
Star Bulk Carriers Corporation (SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, is en route to becoming the largest U.S. listed dry bulk shipping company.
Star Bulk’s countercyclical Excel Maritime acquisition
Star Bulk Carrier’s (SBLK) acquisition from Excel Maritime is well-timed from a short-term and a long-term point of view. The company acquired Panamax/ Kamsarmax vessels at historically low prices, with Panamax vessel prices currently at the lowest level in 2014, a 21% decline compared to its peak in April.
Star Bulk eco fleet and Newcastlemax vessels a benefit for the company
By using Newcastlemax vessels, Star Bulk Carriers Corporation (SBLK) experiences a significant reduction of dollar per ton cost on major routes during a high bunker environment. The benefits of eco are improving cash flow during a high-freight market and downside protection during a low-freight market.
Tip: Accept dry bulk shipping volatility and make better decisions
The combination of high fixed costs and variations in shipping rates are two factors that make industrial companies more volatile.
Overview: DryShips’ fleet management and 1Q earnings turnaround
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.
Baltic Dry Index on the downfall with capsize rates down
In trading, the Baltic Dry Index declined to 850 on June 30, 2014, from 934 at the beginning from the month.
Overview: Nordic American Tankers
In the fall of 2004, NAT owned three vessels and at the end of 2013 it owned 20 vessels—Suezmax tankers—with tankers averaging ~156,000 deadweight tonnage (or dwt) each.
Navios Maritime Partners: A must-know company overview
For the first quarter of 2014, Navios Maritime Partners’ revenue rose 14.4% year-over-year to $57.5 million, led by vessel acquisitions.
Why dry bulk shippers can benefit from China’s record new loans
Loans play an important role in helping an economy grow by stimulating consumption and investment and creating greater overall demand.
Why Indonesia’s nickel ore export ban affects dry bulk shippers
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.
Have dry bulk shippers like Navios gotten ahead of themselves?
We’ve learned through previous research that week-to-week movements in the Baltic Dry Index don’t really have a strong relationship with week-to-week movements in dry bulk shipping stocks.
Timeline: Diana’s time charter fell despite higher BDI in 4Q13
Diana Shipping Inc.’s (DSX) revenue for the fourth quarter, $39.5 million, missed analysts’ consensus of $42.6 million.
Indicators for the boom and bust cycle of crude tankers
Like any other commoditized industry, the shipping industry is also very cyclical due to lengthy construction lead time.
As the Baltic Dry Index turns, Soros tests dry bulk shipping
The companies that Soros bought are some of the largest publicly traded dry bulk shipping companies in the world.
Key tanker stock drivers: Baltic Dirty Tanker Index and Brent oil
Brent oil and the Baltic Dirty Tanker Index Commodity prices and shipping rates are like twins: when prices like oil are rising, they often reflect a faster increase in demand than supply—and higher demand often correlates with trade activity. As vessels like crude tankers can take up to five years to build, they also mean […]
To see the future of shipping, you should follow steel profits
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 […]
Why ship scrapping activity affects dry bulk shippers
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 […]
Leading indicators suggest better outlook for shipping companies in 2013
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, […]