Guggenheim Shipping ETF

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.

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.

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.

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

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.

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.

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 […]

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.

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

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

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.

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.

October’s increase is generally positive for the long-term prospects of tanker stocks like Frontline ltd. (FRO) or Nordic American Tanker Ltd. (NAT).

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.

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 […]

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’ YTD returns were -10% as of April 5, 2018. Gener8 Maritime Partners is the fourth-best performer among its peers YTD.

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 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 (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.

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 […]

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.

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 […]

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 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 […]

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.

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 […]

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 […]

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.

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.

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 […]

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 […]

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.

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.

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 timely and selective acquisitions of additional secondhand modern tankers and the available optional vessels.

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.

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

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 […]

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.

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 […]

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.

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.

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 […]

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.

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.

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.

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

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 […]

On August 30, the Baltic Dirty Tanker Index and Baltic Clean Tanker Index stood at 622 and 604, respectively.

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

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.

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

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’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.

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.

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.

The recent volatility we’ve seen among dry bulk shippers can scare people into thinking they should trade in and out of the stock.

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 […]

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.

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.

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 […]

Due to rapid expansion, Star Bulk’s financing levels are higher compared to its industry peers.

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.

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.

Star Bulk management stated that commodity demand remains healthy, while substantial supply expansion has resulted in surpluses across various commodity markets.

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.

Star Bulk Carriers’ fleet includes 52 operating vessels, 16 second-hand vessels yet to be delivered, and 35 newbuilding vessels still under construction.

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.

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 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.

With faster deliveries and employment of vessels, secondhand vessels tend to reflect industry participants’ expectations for medium-term fundamentals.

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 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.

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.

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.

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 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 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.

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.

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.

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

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.

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

Loans play an important role in helping an economy grow by stimulating consumption and investment and creating greater overall demand.

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.

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.

Diana Shipping Inc.’s (DSX) revenue for the fourth quarter, $39.5 million, missed analysts’ consensus of $42.6 million.

Like any other commoditized industry, the shipping industry is also very cyclical due to lengthy construction lead time.

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

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 […]

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 […]

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, […]