Ship Finance International Ltd

Navios Maritime Partners (NMM) suspended its dividends altogether in 4Q15 after a cut of 52% in 3Q15.

Navios Maritime Partners has announced the suspension of dividends altogether. This follows a 52% dividend cut by the company in 3Q15.

In this part of our series, we’ll explore how steel demand from the construction, machinery, and infrastructure sectors could shape up in 2016.

Many market participants are forecasting a further fall in coal imports for China in 2016.

Under TC (time charter) contracts, vessels are hired for a specific period at a pre-decided daily rate.

The demolition market for dry bulk carriers has been very active lately.

The vessel values of dry bulk companies have deteriorated significantly in the past year due to the pressure on freight rates.

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

Iron ore and coal imports from China remain weak, and steel prices remain depressed. This should continue to weigh on the dry bulk sector.

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.

Dry bulk shipping vessel values have fallen to very attractive prices, especially for secondhand vessels. But investors are still wary of the downside ahead.

Of the 12 analysts covering Navios Maritime Partners, two analysts have “buy” recommendations, seven have “hold” recommendations, and three have “sell” recommendations.

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.

China’s real estate climate index was at 93.34 in October. China’s real estate climate index has been on a broad downtrend since February 2013.

While India could provide temporary relief to dry bulk shippers, its increasing domestic coal output doesn’t bode well for seaborne coal trade.

China’s iron ore imports in September were the highest level of 2015 at 86.1 million tons. This was a rise of 1.7% year-over-year and 16.2% month-over-month.

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.

So would Frontline be able to come up with $190 million to pay off its debt that matures in 2015? As of March 31, 2014, Frontline Ltd. (FRO) had ~$111 million in cash and cash equivalents.

The restructuring gave Frontline time to ride through the industry’s weakness that also negatively affected Teekay Tanker Ltd. (TNK), Navios Maritime Acquisition Corp. (NNA), and the Guggenheim Shipping ETF (SEA).

Why follow the Baltic Dirty Tanker Index? The single most important indicator that affects tanker companies’ performance is shipping rates. One widely followed index that tracks the price of shipping crude oil (unrefined oil) across the ocean for representative routes is the Baltic Dirty Tanker Index. Compiled daily by the Baltic Exchange for rates settled […]

What scrapping activity shows For a near-term fundamental outlook, investors can look towards ship scrappage (retirement) activity. The rate at which companies scrap ships often reveals whether the shipping industry is facing excess capacity. When excess capacity pressures the shipping industry, firms will often retire older ships to relieve pressure on costs and increase cash […]

The importance of 15-year-old vessel price In addition to new build prices, it’s also important for investors to follow 15-year-old vessel prices. Similar to new build prices, the 15-year vessel price reflects the fundamental outlook for the shipping industry. When prices are rising, they generally portray a favorable outlook for rates. When rates are stable, […]

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 […]

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 […]

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 […]

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 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 […]

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 […]

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 […]