coprophagous

Why Traders Are Abandoning DryShips

It is not surprising that investors are getting out of Dry Ships, the only surprise is why they waited so long. The company has a large fleet of overpriced dry cargo ships which are losing cash everyday and will continue to do so as new ships continue to deliver into a over supplied market.
The company is in default on most of its debt and has obtained temporary waivers which will expire shortly.
It announced that is buying two more dry cargo ships without any charter cover which will only further erode cashflow.
The new debt issue will only satisfy the banks and contribute nothing to the company's value.
The rig play looks ok for the moment but with the high price paid for them and the slowdown in world consumption of oil,and again the abundance of available rigs this market will soften also.

Four Shippers Emerging from the Mire

The only charts you can rely on in shiiping are the navigation ones and these analyst graphics ignore all the fundamentals that those active in shipping have been seeing for months. Todays spot rates in dry bulk are a cash drain on all companies in the sector as they barely cover operating costs, do not pay interest or G&A. Furthermore the number of days the ships are employed has also shrunk sharply.
The newbuilding deliveries in this sector as verified by all the major shipbrokers will amount to 3,000 newships over the next 18 months.
To suggest that this sector has suffered so long and should therefore recover is rubbish. The last two shipping recessions in the eighties(dry bulk) lasted 10 years and the nineties(tankers) lasted 6 years.
It will take 10 years for the freight markets to absorb the present fleet and the newbuildings.

Commodities Breaking Out: Will Baltic Dry Index Follow?

Alan Young. Nowhere does the author reflect the effect of the vast newbuilding program or the fact that the BDI is not representative of the majority of the dry cargo market. Shipping companies with expensive bulk carriers that trade in the spot markets will see ever decreasing revenues as the cargo owners gain more control of their shipping with longterm charters and large fleets of their own ships.
Factor that into the graphs.

Commodities Breaking Out: Will Baltic Dry Index Follow?

When will you guys wake up to the fact that the Baltic Dry Index is only a reflection of a very few short term ( spot) fixtures for certain dry cargoes and in no way is an accurate index of the vast majority of shipping rates. The market for drybulk carriers is hugely overtonnaged and getting worse as more than 3,000 new ships will deliver over the next 12 months, most of which have no prearranged employment.
Commodity prices have little bearing on shipping movements but fuel the minds of the day traders who play in a large number of dry shipping stocks.

Selling Most of Excel Maritime into the Euphoria

The BDI is a very weak index which only relies on a tiny percentage of the bulkcarriers that are trading on the spot markets. The spot markets are the most speculative of all and are for single voyages and in no way represent a years revenue. The Dryships onvestors like Eagle anf Navios are mostly day traders that thrive on rumor and gossip and are not interested in fundamentals as long as the stock prices are moved up or down.
Dryships and the others are up to their ears in debt and have huge unfunded obligations on new ships and now oil rigs.
The banks will not renew their default waivers later this year and the companies will all face a severe cash flow problem.
The Chinese recovery is floated all the time but China's fortunes are heavily dependant on a recovery in the US and Europe which is highly unlikely before 2102.
Meanwhile the vast majority of the ships on order will be built allbeit delivered a year or two later, and meanwhile the Chinese are building ships for themselves in the their shipyards in the gaps created by the deferrals and the Iron ore suppliers are building and buying ships themselves.
As for the rigs only Brazil is active in deepwater exploration and the number of rigs on order will exceed demand until the oil price goes to $100pb which may not occur for years.

Slippery Slope: Dry Bulk Shipping Contracts Begin to Default

With spot rates which are for a single voyage still way below operating breakeven it is not surprising that period charters for one year or more are being renegotiated by charterers. This has been the case in the dry markets but the difference this time is that owners have so overpaid for their ships and borrowed heavily to do so they now face iminent bankruptcy. Most of the defaulting charterers are intermediatries who have gambled heavily on markets continuing to rise.
The next shoe to fall will be when the major charterers also renegotiate which has already started.
Very few dry bulk companies will survive but the ships will be sold on at a deep discount which will meet the charterers lower rates.

DryShips Looks Good, Even Without Its Dividends

Dryships needs to be investigated by the SEC and its Chairman by the Attorney General of New York.
It needs to be put into Chapter 11 and all the transfers and payments to its Chairman his family and friends and to Cardiff Maritime brought back into the company for distribution to its creditors and shareholders.
While it remains the favorite of the day traders it will continue to be milked by its Chairman however.

Dryships - Reality Strikes Back

Dry Ships needs to be put into Bankruptcy and the huge payments made to the Chairman's freinds and family be put back into Court for the benefit of the creditors and shareholders.
Thats the only hope they have as the company will soon be insolvent with no recovery in sight for the dry cargo markets.

Genco Shipping's New Bulk Carrier Leased at a Whopping Rate

Before you get too carried away $65.000 per day less 5% commision barely covers operating expenses and capital costs of a ship that cost $150m+ and is only worth $65m today.

Is it Time to Buy Dry Bulk Shippers?

The bigger question is:- will G.E. cancel the contracts for the capesizes he bought 2 months ago from his "Family company' and pay a $400m cancellation fee to that company inline with the $150m+ that he paid 2 weeks ago when he cancelled the panamax ships.
If so he could simply let Dryships go until its cash runs out and he does not need to but it.


On Dec 29 12:42 PM User 327482 wrote:

> I have one BIG question about Dryships: I am an (unfortunate) shareholder
> of DRYS and over the passed couple of weeks, I've been reading the
> (dirty) tricks and the "me and my family and private company Cardiff
> come first" type of management style that Economou has been employing
> with respect to DRYS.
> So, the question: What IF he takes DRYS private? Do shareholders
> loose their money or do we remain shareholders of the private company?
>

Is it Time to Buy Dry Bulk Shippers?

The dry bulk markets are grossly overtonnaged and this will only get worse as the new ships that cannot be cancelled deliver in 2009 and 1st half of 2010.
Period rates barely cover operating expenses and leave little or nothing for debt service.
The yield returns have completely disappeared and asset values are below debt in most cases.
There is no reason to expect any recovery for at least the next three years as China tries to contain its own economic meltdown and reduces its manufacturing capacity in line with the drop in demand from its main customers, the US and Europe.
Expect a raft of banruptcies in the 1st half of 2009, and remember that the surplus ships will be sold at deep discounts to their cost and then chartered at much lower levels reflecting their revised capital costs.
This will further prolong the market downturn.

Baltic Capesize Index Surges: A Step Towards Industrial Recovery?

Dont get carried away by the BDI index, it is a good barometer on the way down because it represents the highest of a few actual fixtures. It is not so good on the way up as the highest rate of a few reported fixtures does not represent the vast majority of the market.
There are over a hundred large dry bulk carriers sitting empty and another hundred or more to deliver in the next 12 months.
China continues to release information that shows their economy is contracting with exports off 30%+ and manufacturing down 50%+ in southern China.
The collapse of a significant ore company in Australia today and the reports from steel mills and iron ore miners points toward a much weaker spot market for dry cargoes and period fixtures do not meet the economics of ship prices which form the few reported sales indicate a 60%+ decline from those of the last couple of years.

3 Shippers Buoyed by Positive Movement from the Baltic

The three stocks you mentioned are not in the dry bulk trades, two are tanker companies and one is a US domestic shipping company.
Also the BDI is totally unrepresentative of the overall dry market as it was represented by a very few actual fixtures.
The majority of dry bulk ships in the medium and large sizes are losing their shirts as rates if available are barely covering running costs and making no contribution to debt.
The Chinese outlook continues to worsen with manufacturing in Southern China off 50% from last and projected to drop another 50% in 2009.
Demand for steel is down dramatically and China is reducing its steel exports as the world steel markets have collapsed.
Expect all the dry cargo companies to struggle to stay solvent with many going bankrupt in the first quarter of 2009.
Tanker stocks will take a severe hit in Q1 2009 as rates decline sharply in response to reduced production and lower demand and delivery of new ships.

Dryships' Questionable Deals Don't Help Investor Confidence

While most other companies are canceling orders for no penalty this looks like daylight robbery.
The private companies took a profit from the original sale and also sold some contracts for larger ships to Dryships a couple of months ago.
The market for these has totally collapsed so are we likely to see a repeat deal which would drain most of the remaining cash from dryships?