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Lower lease rates on those ships that they lease would be helpful but where they really need help of course is from a strengthening world economy giving rise to greater demand for bulk shipping and stronger rates for such transport. Is the bottom now in for the industry as a whole - or - is the worst still to come? I am in EGLE as of last week....Shall see.....
Why Goldman Sachs’ predicted 15% iron ore price fall helps Soros
Lower iron ore prices will be one of the major catalysts for higher dry bulk shipping rates in 2014. According to a recent Bloomberg article on Goldman Sachs’ forecast for iron ore prices in 2014, gold, iron ore , soybeans, and copper are all expected to drop at least 15% next year due to supply increases....
Soros Source Link
The story of dry bulk shipping growth doesn’t just stop at falling iron ore prices. For iron ore producers to keep expanding projects, they must expect prices to remain favorable when additional capacity comes online. Recent commentaries on currency rates and reforms have been encouraging, and they should positively impact demand for dry bulk vessels in 2014 and 2015.
Currency Rate Link
China to Take Iron Ore Pricing Power From Miners
China will take control of iron ore pricing in the next two years as rising supplies of the steelmaking commodity return bargaining power to buyers, former Noble Group Ltd. Vice Chairman Harry Banga said.
Prices of the second-biggest seaborne commodity will drop to $95 to $110 a metric ton, said Banga, who in May started The Caravel Group Ltd. Iron ore traded at $135.90 a ton at the Chinese port of Tianjin yesterday.
Mine expansions by producers including Rio Tinto Group and BHP Billiton Ltd. (BHP) will push the market into a surplus next year, and the 82 million-ton glut will be the most since at least 2008, Goldman Sachs Group Inc. said in August.
The shift in bargaining power may also spur an expansion of the iron ore securities market in Asia, Banga said,“Buyers will be calling the shots,” 63-year-old Banga, who has traded iron ore for almost 20 years, said in an interview in Hong Kong. “It will change very quickly over the next two years and the Chinese will then control more of the pricing.”
Securities Market
Contract volumes for iron ore securities traded may potentially reach twice the size of the almost 1.2 billion ton physical market as a new generation of overseas-educated managers at Chinese steelmakers will be more willing to use the contracts to hedge risks, Banga said.
Contracts traded on exchanges including the Singapore Exchange Ltd. and Dalian Commodity Exchange will account for about 130 million tons to 150 million tons this year, he estimated.
“The growth in the last three years itself is tremendous and it’s just the tip of the iceberg,” he said of the contracts.
Record iron imports by China, the biggest steelmaking nation, in September and gains in October don’t represent a reversal of the trend of slowing demand, Banga said. Mills are just stocking up ahead of the Chinese New Year holidays in January when trains will shift to moving passengers instead of cargo, he said.
Price Rally
The commodity has rallied 23 percent from this year’s low on May 31 and is up 57 percent from September last year when prices touched an almost-three-year low. Iron ore entered a bull market in July as China’s economy accelerated, spurring Standard Bank Group Ltd. and Australia’s Bureau of Resources and Energy Economics to increase price estimates in the past few weeks.
Source Link
Rain Slowing French Corn Harvest Widens Premium to U.S. Prices
France’s corn harvest, the biggest in the European Union, is being delayed by excess rain, slowing exports from the country and pushing up prices for the grain relative to those in the U.S.
Farmers in the main French growing regions still needed to harvest 42 percent of their crops as of Nov. 11, compared with just 12 percent at the same time last year, according to crop office FranceAgriMer.
Growing areas in the southwest, center and northeast had two-to-three times the normal amount of rain in the last two weeks, after the northeast saw double the average precipitation in October, AccuWeather Inc. said.“Soil moisture is a real disaster,” Renaud de Kerpoisson, the president of Bourges, France-based farm adviser Offre & Demande Agricole, said in an interview last week. “There is not enough corn on the market at this moment and everybody is waiting for the harvest.”
Corn for January delivery on NYSE Liffe in Paris closed at 174 euros ($234.93) a metric ton on Nov. 15, about 50 euros more expensive than December futures on the Chicago Board of Trade, the contract closest to expiration. The premium widened from 17 euros a ton in June, while the price difference between contracts with those delivery months was 32 euros a ton at this time last year. Corn has still tumbled on both exchanges in 2013 on the outlook for record production worldwide.
The EU issued licenses for French shippers to export 166,583 tons of corn since the marketing year began July 1, 12 percent less than at this time last year, according to online data from the 28-country bloc. French corn exports may total 5.62 million tons during the 2013-14 season, down 14 percent from last year and below a previous forecast of 5.91 million tons, FranceAgriMer said Nov. 13. It also cut its estimate for the French harvest by 1.4 percent to 15.16 million tons.
French Corn
Spot prices for French corn in Bordeaux were $237.85 a ton as of Nov. 14, or $22.70 more expensive than U.S. grain at the Gulf of Mexico at $215.15 a ton, said Nathan Kemp, an economist at the International Grains Council in London. French prices were near parity or at a discount to the U.S. from mid-August to mid-September, IGC data show. The U.S. is the biggest exporter.
Harvest is progressing slowest in southwest France, with 37 percent of crops collected in Aquitaine and 45 percent in Midi-Pyrenees as of Nov. 11, compared with a 90 and 95 percent pace respectively last year, FranceAgriMer said. Agen, France, located in Aquitaine, had 3.5 inches (8.9 centimeters) of rain in the first two weeks of November, compared with normal rainfall of 1 inch, said Dale Mohler, a senior meteorologist at AccuWeather.
Precipitation may slow fieldwork further this week, with western and central France expected to receive an inch of rain from storms starting Nov. 20, Mohler said. Northeastern regions may be drier, he said.
Farmers “don’t harvest if it’s too wet, so they need days with sun for things to dry out,” Mohler said. “This time of year the sun is pretty low, and it takes longer to dry out than it would in September.”
Source Link
Grain futures - weekly outlook: November 25 - 29
U.S. grain futures ended Friday’s session mixed, with soy prices rallying sharply to hit an eight-week high amid ongoing indications of robust demand for U.S. supplies.
On the Chicago Mercantile Exchange, soybeans for January delivery jumped 2.17% on Friday to settle the week at USD13.1940 a bushel by close of trade.
Prices of the oilseed rose to a daily high of USD13.2200 a bushel earlier, the strongest level since September 27.
The January contract ended Thursday’s session up 1.39% to settle at USD12.9140 a bushel.
On the week, the January soybean contract advanced 2.95%.
The U.S. Department of Agriculture confirmed private sales of 115,000 tonnes of U.S. soybeans to China on Friday.
That followed a weekly USDA export report on Thursday which showed soybean sales last week well above expectations.
Meanwhile, corn futures for March delivery declined 0.06% on Friday to settle the week at USD4.2920 a bushel. Corn prices rose to a session high of USD4.3220 a bushel earlier, the strongest level since November 13.
The March contract settled 1% higher on Thursday to end at USD4.2940 a bushel after the USDA said net corn export sales totaled 945,100 tonnes last week, at the high end of trade expectations for 750,000 to 950,000 tonnes.
On the week, the December corn contract advanced 1.67%, the first weekly gain in five weeks.
Corn prices have been on a downward trend in recent months amid expectations this year’s corn harvest in the U.S. will be the largest on record. Prices of the grain slumped to a four-year low of USD4.1540 a bushel on November 8.
Elsewhere on the Chicago Board of Trade, wheat for March delivery rose 0.34% on Friday to settle the week at USD6.5700 a bushel. Earlier in the day, wheat prices climbed to a session high of USD6.6000 a bushel, the strongest level since November 11.
CBOT March wheat prices inched down 0.11% on Thursday to settle at USD6.5460 a bushel.
The March wheat contract ended the week with a gain of 1.91%, the first weekly advance in five weeks.
Wheat prices remained supported amid concerns over crop conditions in key southern hemisphere exporters.
In the week ahead, market players will focus on the release of key weekly USDA data, including crop progress numbers on Monday and export sales figures on Thursday.
Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.
grain-futures
Thanks! Nice that it went up some but EGLE was up big on Friday. The Boltic index only went up a little so I wonder if there is another reason for the jump.
Baltic Supramax Index (Nov 22) 1393 UP + 15
Baltic Supramax Index Link
BHP Billiton looks to lift production as China growth remains key driver
Global mining giant BHP Billiton (LON:BLT) expects to lift production over the next two years but said a slowdown in China was dragging on growth.
The group, which operates in 26 countries, held its AGM in Perth on Thursday and chief executive Andrew Mackenzie drew attention to the firm's 2013 results in August, which showed record production in a number of commodities and US$2.7 billion of annual cost savings.
"Our focus on productivity is extracting more value from existing operations," he told the meeting.
"Over the next two years, we expect to increase production by eight per cent per year, on a copper equivalent basis, and deliver additional productivity-led cost savings.
"We are increasing our focus on our 'four pillars': iron ore; petroleum; copper; and coal, and we continue to operate our aluminium, manganese and nickel businesses as efficiently as possible."
He said the group's strong operating performance this year was underlined by a 13th consecutive year of record production at the Western Australia iron ore operations and a 28% increase in production at the Escondida copper mine in Chile.
The firm says conditions remain challenging in Europe, but in Asia sees overall growth.
However, in China, which accounts for around 30% of group revenue, the weaker trade and manufacturing activity due to the global slowdown has weighed, it said.
However, the future looks brighter, pointed out chairman Jac Nasser.
"We expect the Chinese economy to grow at over 7% next year.
"China and other emerging economies will be the major drivers of global economic growth in the long term, which could deliver up to a 75% increase in demand for some commodities over the next 15 years."
Nasser added: "Only a few countries in the world are well placed to supply this increased demand for commodities, and Australia is one of them.
"Therefore, we believe your company remains well positioned to contribute to the prosperity of the regions where we operate, including Australia."
Nasser notes that in the last two decades, more than 650 million people have been lifted out of poverty in China alone and it is expected that another 250mln will move to the cities over the next 15 years.
BHP is the only company to offer a broad-based exposure to steel making, metals, energy and food, the chief executive told the meeting, and he made particular reference to the fertiliser potash, demand for which he expects to grow by 2-3% a year by 2030.
This growth, he said, will be driven by a rising population and greater economic prosperity, which will change the patterns of food consumption, requiring higher yields from increasingly-constrained arable land.
The firm said it has an average annual investment in potash of US$800 mln, which it expects to continue.
Source Link
Soybeans Rise to One-Week High as Demand for U.S. Supply Climbs
Soybeans rose to a one-week high in Chicago, topping $13 a bushel, on signs demand is increasing for supplies from the U.S., the world’s second-biggest exporter.
U.S. export sales of soybeans climbed to 1.38 million metric tons in the week ended Nov. 14, up 51 percent from the prior week, the U.S. Department of Agriculture said yesterday. China, the world’s top importer, bought 84 percent of the total. Soybeans fell 7.4 percent this year as global production may climb to a record 283.5 million tons, spurred by an expected jump in South American output, the USDA estimates.
"The U.S. soybean harvest is nearing completion and we see strong nearby demand for beans," Jonathan Lane, a trading manager at Gleadell Agriculture Ltd. in Gainsborough, England, said in an e-mailed report today. "In South America plantings continue and currently there are no major problems reported."
Source Link
Understanding China’s Arctic Policies
China is playing a prudent long game in the region, with economics the driving factor.
The potential commercial benefits of cargo transportation through the Arctic in comparison to the Suez Canal also seem appealing. In August and September 2009 two German heavy-lift vessels, MV Beluga Foresight and MV Beluga Fraternity carried a cargo of steel pipes from Arkhangelsk (Russia) to Nigeria using the Northern Sea Route. The new passage shortened the distance for 3000 nautical miles and reduced fuel consumption by 200 tons per vessel, resulting in savings of 600 000 U.S. dollars.
A year later, the Hong Kong vessel MV Nordic Barents transported iron ore from Kirkenes (Norway) to Shanghai using the same route and cut expenses on $180,000.
In 2012, 46 vessels carried more than 1.2 million tonnes of cargo through the Northern Sea Route, up 53 percent compared with 2011.
Rest of the Story
Wow what a great day today. If I had the cash would have bought more when it was under $3.
Baltic Supramax Index 1378 UP + 7
Eagle Bulk Shipping (EGLE) 3.17 UP + 0.37 (13.21%)
EGLE fleet is comprised of Supramax ships....
Baltic Supramax Index
Korea Line Corp 19,300.00 UP +200.00 (1.05%)
EGLE has KLC shares on the books....
Korea Line Corp
Latest 10-Q at the SEC for DD review and research on the company.
EGLE 10-Q
Great Day IMO with the Balt Dry Index up the Shorts know when to fold and cover.
Today's News, November 22, 2013
8:15a
Baltic Dry Index Up 1.1% to 1,483 (Benzinga)
Frost, rains hit Australia wheat crop, drag on quality
Unseasonal rains in Western Australia and frost on the country's east coast have hit wheat crops in the world's No.2 exporter of the grain, dragging down quality and reducing harvests.
A decline in supply of high-protein wheat from Australia could force major buyers such as Indonesia and China to seek more volumes from the United States and Canada, underpinning prices there.
Australian wheat has seen strong demand this year, with almost half of estimated exports for 2013/14 already sold by traders. China has been at the forefront of this buying after its own crop was damaged by unfavourable weather earlier in 2013.
"The impact of frost damage is a greater proportion of small seeds," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia, referring to grain that must be removed before milling. Crops must contain no more than a limited number of undersized seeds to meet standards set by trade body Grain Trade Australia.
"We are seeing screenings (for small seeds) coming in from the east coast harvest higher than we would normally expect, which can obviously push the grades down," Mathews added.
Unsure about grain quality, Australian farmers have been reluctant to forward sell their crops, leading to shortages in the market. About a quarter of the country's wheat crop has been harvested.
"Traders have been able to cover just about 30 percent of what they have sold," said one Sydney-based broker. "Growers are not selling and offshore demand is very strong."
The crop in parts of New South Wales and Victoria was hit by frost last month, although other regions of the eastern grain belt, including Queensland, have produced high-protein wheat.
GrainCorp last week warned of the impact of unfavourable weather in areas of New South Wales. "We expect the harvest (quality) to be revised down because of the frost damage," said Alison Watkins, the company's chief executive and managing director. "To what extent, is not yet clear."
Elsewhere, unseasonal rains are likely to hurt wheat quality and output in Western Australia, where harvesting is 10 percent complete.
Going to America?
Crop-downgrades in Australia are likely to create more demand for hard red winter wheat traded on the Kansas City Board of Trade and spring wheat on the Minneapolis Grains Exchange.
U.S. hard red winter wheat prices dropped to a two-month low on Monday, the same day that spring wheat slid to lowest since June, 2012 as U.S. shipments face stiff competition in the international market.
Source Link
Baltic Supramax Index 1371 UP + 8
Baltic Supramax Index
Korea Line Corp KRX:005880 closes 19,100.00 UP 1,100.00 (6.11%)
KLC Chart
From Eagle FORM 10-Q
On May 9, 2013, the 538,751 additional KLC common shares were issued and secured at the Korean Securities Depository. On November 11, 2013, we took possession of the share certificates.These shares replaced the note receivable recorded pursuant to the January 3, 2013, termination agreement. The fair market value of the shares upon issuance was in excess of the fair value of the receivable and resulted in a gain of $32.5 million in the second quarter of 2013.
KLC completed its financial reorganization by the middle of September 2013, and emerged from bankruptcy in October 2013. On October 28, 2013, we received early prepayment of $3.9 million to settle our long term receivable from KLC, which resulted in an additional gain on time charter agreement termination of $3.5 million recognized in the third quarter of 2013 as the carrying value at September 30, 2013 was adjusted to reflect the elimination of credit risk.
As of September 30, 2013, we sold 55,628 shares of KLC for a total consideration of $2.2 million and we realized loss of $0.4 million.
The KLC stock held by the Company is designated as Available for sale and is reported at fair value, with unrealized gains and losses recorded in shareholders’ equity as a component of accumulated other comprehensive income. As of September 30, 2013, the fair value of the remaining 566,529 KLC shares held by the Company was $22.1 million. As of September 30, 2013, the change in the fair value of our KLC investment was considered as other than temporary, and therefore the Company recorded a non-cash impairment loss of $7.3 million in Other expense in the third quarter of 2013.
SEC Eagle FORM 10-Q Link
Background Information and charting on the BDI Index from a trader point of view....
charting on BDI Index
Baltic Supramax Index
90-Day Data and Historical Trends
Baltic Supramax Index
The spot market for the supra-index is going up, which are the ships in our fleet. The Korealine shares prices are causing the problems which have been trading lower....four quarter the company will record a lower price in the KLC shares. The KLC shares value is priced mark to market on the EGLE balance sheet.
We need index to start back up again. We are going lower everyday now. Way oversold now.
Indexes
http://www.bloomberg.com/quote/BDIY:IND
and here is a breakdown for different ship sizes
http://www.lloydslist.com/ll/sector/markets/market-data.htm
Edit Posted before I saw Jester's charts, those are even better
Great charts, thanks! Rates still look much better than a year ago. Would be nice to see an increase again before the end of the year.
Baltic Exchange Supramax Index
Source Link
You can see varies daliy rates of Baltic Exchange Capesize, Baltic Exchange Supramax, Baltic Exchange Handysize, Baltic Exchange Panamax at following site;
Looks like most shippers went down today also. Wish I new how to track he balk rates dally. Still kind of new to the shippers.
What happened at the EOD today? Huge drop below $3. No news or anything that I see. Thought that after earnings drop would be a good time to get in. Always happens to me after I go in. If I had more money I would buy more under $3.00 for sure.
The Commodities Supercycle and Your Grocery Bill
As you shop for Thanksgiving dinner this year, you may long for the good old days when food was cheaper. This isn’t just your nostalgia speaking. Over the past decade, food prices have increased at a very fast clip. According to the U.N.’s Food and Agriculture Organization, the global food price index has increased by 125 percent since 2000. To understand why, consider the seemingly intractable prices of global commodities markets—your standard agricultural goods like coffee, sugar, and wheat, or resources like crude oil and coal that are used to produce or transport those goods. Not only do these complex commodities markets determine the cost of what we eat, but their high prices can fuel the kind of social unrest that in some countries has toppled governments.
These markets are as volatile and hard to forecast as the effects of their swings are contradictory. Commodities are both the origin of major fortunes as well as the reason behind financial crashes. Their gyrations also drive major shifts in geopolitical power—they can boost the influence of some countries while weakening others. For example, during the commodities boom that took place between 2000 and 2010, exporters of soy, iron, cotton, oil, copper, wheat, petroleum, wood, and other basic goods did exceedingly well. Countries from Brazil to Malaysia used the windfall to improve living standards for millions of their poorest citizens. According to the World Bank, the size of the Latin American middle class grew by 50 percent—from 103 million in 2003 to 152 million in 2009. Since then, despite the global recession, the region’s middle class has continued to grow—to the point where, the World Bank reckons, its members are currently more numerous than the poor for the first time in history.
In these ways, high global commodities prices have been a boon to emerging markets and a source of global economic stability. Economic growth in China and India—whose populations account for 37 percent of the world’s population—has done much to fuel the rise in demand for commodities. In the past five years, agricultural imports to China alone have grown by 23 percent each year. But the spike in demand has also added to the uncertainty that characterizes these markets. The planet is paying dearly too, as rapid growth in consumption—especially of goods like oil, coal, and metals that are non-renewable and highly polluting—has contributed to the dangerously high carbon dioxide levels in our atmosphere.
Now, however, there is a widespread perception that commodity markets are about to hit a wall that, once again, will trigger important shifts in the world economy and international politics. Many experts believe that the current installment of the “commodity supercycle” is winding down. These supercycles are periods of high prices that last for about 15 years on average and that have regularly appeared over the last 150 years. In the past decade, for example, the average price of commodities doubled. This sharp rise contrasts with the fact that, over the course of the 20th century, commodity prices (adjusted for inflation) fell an average of 0.5 percent every year.
To complicate matters, between 2000 and 2013, the price of commodities not only soared, but their variations were three times more extreme than they were in the 1990s. Consistent with this high volatility, prices have now stopped rising—a trend reversal that started two years ago. In the first half of 2013, the world index of commodities prices fell 10.5 percent, and the prices of some metals—copper, aluminum, and nickel—fell a whopping 20 percent. The economic slowdown in China, the anemic situation in Europe, and sluggish growth in the United States have all contributed to a drop in demand and a halt in price increases.
The surprise is that despite the many forces pushing commodities down, prices on average remain roughly at the same level as they were in 2008, when the global economic crisis began. According to a recent study by the McKinsey Global Institute, it is premature to declare this episode of the supercycle over. Prices will remain high—and not for the usual reasons. Prices are pushed up—or kept high—not just because demand is still stronger than it was in the past, but also because these goods have become more expensive to produce. Why is this? The reasons are many and range from climate change—which alters crop cycles and increases the frequency and intensity of droughts and floods—to the restrictive export policies governing agricultural products in some countries. Labor turmoil in producing regions has also become more common. There is increased activism in farm communities, and social protests are more frequent and disruptive. According to McKinsey, producers are now forced to operate in ever more remote and inhospitable places and to use more expensive technologies.
The bad news resulting from these trends is that food prices will not fall significantly in the short term. The good news is that high prices are creating huge incentives to boost production, increase productivity, and invent technologies that will eventually push prices down.
But the inescapable reality is that commodity prices and their variations will continue to surprise us with their volatility and their immense impact on the world’s distribution of power and prosperity. And on our grocery bill.
Source Link
I think EGLE is planning on the spot market then lock in with a longer term contract.
Many dry shipping companies and experts are forecasting significantly higher shipping rates in 2014 and beyond.
Many dry shipping companies and experts are forecasting significantly higher shipping rates in 2014 and beyond. Now would be a great time to prepare in advance. Double rates affect the valuations of companies such as Genco Shipping & Trading, Baltic Trading Limited and Paragon Shipping much more dramatically than you'd think.
Why third quarter and double rates
For the easiest, quickest way to estimate what double rates would mean for a dry shipper, base your calculations on the most recent third quarter. Trying to predict what higher rates might mean for future performance brings in too many variables to yield a clear picture. Using solid numbers from the past will at least give your calcuations a firmer foundation.
Also, while you can calculate what the impact would have been for any percentage increase in rates, shipping rates for 2010 were more than double the current rates for the majority of 2010. It's not hard to imagine a return to rate levels equal to that of a mere three years ago, especially given the industrywide optimism about the upcoming rate environment.
Genco Shipping & Trading
Genco reported its third-quarter results on Nov. 6. Shipping revenue was $58.6 million. Operating expenses were $72.8 million. Interest expense was $23 million. All of this led to a net loss of $35 million.
Since virtually all of Genco Shipping & Trading's fleet operates based on the daily spot rates, if those rates had doubled, shipping revenue would have nearly followed suit. All things being equal, this would have meant an extra $58.6 million in revenue, all falling straight to the bottom line, and it would have reversed a net loss of $35 million to net income to $23.6 million.
On an annualized basis, that would put Genco's P/E multiple under 2. Based on P/E alone, that is very cheap -- as long as you remember that Genco Shipping also has debt payment concerns coming due early next year.
Baltic Trading Limited
Baltic also reported its third-quarter results on Nov. 6. Similar to Genco Shipping & Trading, Baltic Trading Limited's fleet operates based on the daily spot market. Revenue was $9.1 million, against total operating expenses of $10.2 million and interest expenses of $1.1 million, all of which led to a net loss of $2.2 million.
If rates had been twice as high, revenue would have been $18.2 million, and net income would have been $6.9 million. That comes out to a P/E multiple of around 6. While not as cheap as Genco Shipping & Trading on a P/E basis alone, Baltic Trading Limited is in better financial shape to begin with.
Paragon Shipping,
Paragon reported its third-quarter results on Nov. 7. Net revenue was $13.4 million. Total adjusted operating expenses were $7.8 million. Adjusted net loss was $0.4 million.
If rates had been twice as high -- and again, all other things being equal -- Paragon would have added $13.4 million to its bottom line. This comes out to $13 million in net income. On an annualized basis, the P/E multiple is slightly over 1. On the basis of P/E multiple only, Paragon Shipping would have been the cheapest of the 3.
Final Foolish thoughts
While I am in no way predicting that rates will double, it is a possibility. As an investor, it's wise to prepare for all possibilities, both positive and negative. As this exercise shows, at least for these dry shippers, doubled rates would make these companies' stock prices appear undervalued. Follow the spot rates for all ship sizes -- especially how they've changed relative to any previous quarter. By doing a rough calculation of how a change in rates would have affected an individual company, you can get an early lead on its results ahead of the official report.
Source Link
This seems like good timing with many contracts ending at the end of the year. Do you think EGLE will get contracts at a much higher rate now?
Turkey's steelmakers book South Africa, Benelux and Baltic scrap cargoes
Turkey's steelmakers booked several deepsea scrap cargoes at the end of the week from Benelux, Baltic and South Africa suppliers as the US East Coast's biggest recyclers continued to hold out for higher prices, market participants said Friday.
One cargo containing 21,000 mt of heavy melting scrap I/II (80/20 blend) and 21,000 mt of bonus grade material was booked at an average price of $394/mt CFR Iskenderun by an electric arc furnace.
A South Africa-based trader moved its third bulk cargo to Turkey in the last few weeks, selling at $388.50/mt CFR Iskenderun for 23,000 mt of HMS I/II (80/20 blend) and 7,000 mt of shred at $393.50/mt CFR. The trader normally sells its material to India, but the South Asia market has been subdued in recent months.
Platts daily assessment reacted to the above trades, slipping $1 to $389/mt CFR Turkish ports for HMS I/II (80/20 blend) on Friday.
US-origin bulk suppliers were still targeting $395/mt CFR for HMS I/II (80/20 blend).
Two Baltic suppliers also were heard selling cargoes at the end of the week, with one Marmara mill purchasing at $389/mt CFR for Scandinavian HMS I/II (80/20 blend) in bulk. At the same time, a Romanian recycler succeeded in selling a bulk shipment of bonus to a large steelworks at $402/mt CFR Eregli towards the end of the week.
Freights have hardened in the Black Sea basin, with shipments to Aliaga costing around $24-25/mt for a small shipment from Romania; a sale was made at $394/mt CFR for a mixed HMS-bonus cargo to a medium-sized EAF mill.
Source Link
Handy-size Baltic-NWE tanker rates jump as fuel oil exports rise: sources
The cost of sending 30,000 of fuel oil from the Baltic to North West Europe rose sharply Wednesday as fuel oil exports climbed ahead of ports in the Baltic region icing up and bringing in loading restrictions, shipping and trading sources said Thursday.
Freight rates on the Baltic-NWE route, basis 30,000 mt, jumped Worldscale 15 over the day to w150, reaching the highest assessed since May 21, 2013 when the rate on the route was w152.
Shipping sources continued the indicate the rate on the route at w150 early on Thursday on the back of a tight tonnage list and more demand for cargoes.
"More stems are in the market and ships were not available, so it got tight on the prompt positions for the ships," a shipowner said.
Trading sources said fuel oil exports have been ramped up, especially from the Baltic ports, as sellers are keen to maximise volumes before the ports freeze.
In the winter, fuel oil requires heating before being loaded on tankers, and ports restrict the number of arriving rail cars they can handle.
Typically this results in mounting delays along the railways. Traders reported delays of rail cars on the approach to St. Petersburg but attributed this to the current increase of exports.
"Everybody tries to get product out before restrictions are enforced," said a source.
This time last year the temperatures were much lower, but this year the autumn has been unusually mild for a longer period, traders said.
Source Link
Soyabeans, corn export premiums steady to firm
Corn and soyabean export premiums at the US Gulf Coast were mostly steady to firm on Friday amid weaker futures and limited available capacity to load export shipments through the end of 2013, traders said. Soyabean futures on the Chicago Board of Trade fell 2.5 percent on softening cash markets and good South American crop weather. Corn slipped as the US government proposed easing ethanol blend requirements.
FOB basis offers were unquoted for November and much of December after heavy forward sales earlier this year for those shipping periods. However, November and December loadings would be available at a hefty premium if a buyer was willing to pay, traders said. US corn prices were competitive on the world market for early 2014 shipments and traditional buyers have been booking their routine purchases to lock in some of the lowest prices in three years.
China will continue buying buy soyabeans and corn for state reserves from farmers this year, a move that is expected to keep domestic prices higher than the global market, triggering more imports. Record-large purchases of US soyabeans by China are on the books. Good growing weather in South America raised the risk that a larger-than-normal share of outstanding sales could be switched to Brazil or Argentina origin beans, traders said. US wheat export premiums at the Gulf Coast held steady in quiet trade.
Source Link
The charters with KLC are new to me. Hope it does not hurt future earnings. Hopfully shipping rates increase in the coming months so EGLE can increase cash flow.
As per your request, I will take a look at how I see the technicals shaping up here.
http://stockcharts.com/freecharts/gallery.html?EGLE
Again, I would warn that my T/A is for entertainment purposes only, and that serious investors should rely on multiple sources for their DD, etc. etc.
My preliminary investigation appears to indicate Elliott Wave two. Wave 1 broke through serious resistance near 7, and then fell into the retrace wave. It appears to have violated a support near $3.5, and may continue lower until the move is exhausted. A subsequent bounce is likely to take it to $5.5, and another subwave down may consolidate for the remarkable Wave 3 up. If support holds above the bottoms made in 2012, the long term investor could be substantially rewarded by having this stock in their portfolio. Sometimes the subwaves will happen in minutes, but I have seen them take years.
The short term picture appears to have a strong momentum and cash flow toward lower prices. Lending support in the event of a fall near $2.25 would be a "shark" strategy. I may circle in this water before I start to eat.
Looking at this chart, hourly
https://www.tradingview.com/x/kWrQFaOh/
Thoughts?
Accounting for owned vessels by shipping companies
Source Link
DD Background Information for reviewing Annual Reports
Panamax coal freight rates in Pacific on downtrend, bearish sentiments prevail
Bearish market sentiments and excess tonnage continued to weigh on Panamax freight rates on established coal-carrying routes from South Africa and Indonesia to India through the week, extending their downtrend Friday.
Platts assessed Panamax coal freight rates from South Africa's Richards Bay to Paradip port on India's east coast at $16.60/mt and to Mundra on the west coast at $16.10/mt, each down 20 cents from Thursday and also down 50 cents over the week.
"The (US) grain season is looming towards an end, and vessels that were previously ballasting from China to the Atlantic or US Gulf are now choosing to remain in the Pacific," a Norway-based industry analyst told Platts Friday. "This is putting a lid on rates in the Pacific," he added.
An India-based shipbroker reported having an offer from a vessel owner at $15/mt in response to a bid from a charterer at $14.75/mt for shipment of 75,000 mt plus/minus 10% of thermal coal from Richards Bay to Navlakhi Anchorage on India's west coast, for 10-24 December laycan.
Market sources however noted the bid-offer levels were "aggressive" and "not repeatable."
Platts also assessed Panamax coal freight rates from Indonesia's Banjarmasin port in South Kalimantan to Paradip at $10.10/mt Friday, down 15 cents from the previous day and also down 30 cents over the week.
From Banjarmasin to Mundra Panamax rates were assessed at $11.65/mt Friday, unchanged from Thursday but down 15 cents over the week.
Charterers' rates were seen at $11-11.50/mt on the South Kalimantan to west coast India route while Panamax vessel owners were seen quoting rates above $12/mt, another India-based shipbroker said.
As reported, demand for gearless Panamax vessels found some support from the continued uptrend in geared Supramax rates, which market participants pegged at $13-14/mt on the Indonesia to east coast India route, about $3-4/mt higher than gearless Panamax freight rates.
Market participants were seen preferring gearless Panamax vessels, with additional costs arising from use of shore-cranes averaging about $2/mt. But the limited availability of shore-cranes at Indonesian ports was proving a hindrance, sources said.
BEARISH SENTIMENTS PREVAIL
Although coal shipments from Indonesia towards China provided some support to freight rates in the region this week, market participants largely expected bearish sentiments to prevail next week.
"It was a quiet day in the freight market," a Singapore-based shipbroker said Friday. "I think owners and charterers are waiting for next week to open the blood bath," he added.
In its weekly chartering report issued late Thursday, Braemar Seascope noted that the Pacific market "has softened further, and number of vessels with prompt dates has been increasing steadily over the past seven days."
Despite "reasonable" coal volumes from Indonesia, "hire rates on this route have eased from recent levels," the report said.
"Negative trends in the paper and physical market, have kept period activity in check, and it is likely to remain at subdued levels for the time being," Braemar added.
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China's shipbuilding sector must consolidate to stay competitive: official
China's troubled shipbuilding sector must embrace painful measures and cut shipbuilding capacity by at least 30% to remain competitive amid plummeting utilization rates, a shipping industry expert said at the World Shipping Summit in Ningbo Wednesday.
"The growth rate in the demand for new ships is slowing down. This year is really bad, and I can feel the impact. Chinese shipyards have to reduce overcapacity," Bao Zhangjiang, director of the China Shipbuilding Industry Research Center, told the conference, organized by shipowner Cosco.
"Realignment of the Chinese shipbuilding industry is the crucial need of the hour, and we need the courage to eliminate the excess capacity," Bao added. "There should be a competitive transformation of the industry."
Bao said China's shipbuilding industry helped tide over the global market in the mid-2000s when higher oil and dry commodity demand created a shortage of new ships. That translated into huge shipping requirements for China.
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"During the heydays of the shipping market, there had been an influx of new shipbuilding capacity, which when combined with the severe demand destruction during the global financial crisis, has led to a situation of capacity overhang in the short term," he said.
Bao expects global demand for shipbuilding to be 32 million compensated gross tonnage, or CGT, in the next two years, compared with current world capacity of 61.2 million CGT.
"The current imbalance between supply and demand will last for quite some time," he said.
CGT is an indicator of the amount of work needed to build a given ship. It is calculated by multiplying the ship's tonnage by a coefficient, which is determined according to type and size of the particular vessel.
Bao said one factor that will keep Chinese shipyards competitive is a focus on quality above quantity. He said the Chinese government was reworking the industry structure document to realign the business with that goal in mind.
"We are mainly involved in building dry-bulk ships, which are low-end vessels," he said. "We want to move from being a shipbuilding country to shipbuilding power. We will streamline our capacity, and this will mark the second stage of the Chinese shipbuilding industry."
Bao expects many mergers and acquisitions in the industry.
Chinese shipyards have already started reworking their strategies, with cash-strapped ones already tying up for additional capital.
For instance, China Rongsheng Heavy Industries Group Holdings Ltd. was in talks with two coastal cities and government departments in May to secure financial assistance after the nation's shipowners association forecast a slump in vessel orders through next year. The country's largest independent shipyard was in discussions with the cities of Rugao and Nantong.
COSCO (Lianyungang) Shipyard Co. Ltd. -- a joint venture of Jiangsu Lianyungang Port Corp. Ltd. and COSCO Shipyard Group Co. Ltd. -- was set to be dissolved after steep losses of Yuan 30.28 million ($4.93 million) in 2011 and Yuan 80.98 million in 2012. The joint venture was created in early 2008 with a registered capital of Yuan 180 million.
In May, China Rongsheng Heavy Industries Group Holdings Chairman Chen Qiang doubted whether many among the more than 100 shipbuilders would survive but said the chances were brighter for the top 20 yards. Orders for new ships tumbled 43.6% last year to 20.41 million dmt in China, according to data from the Chinese Ministry of Industry and Information Technology.
Figures released in June by shipbroker Clarkson showed that China's shipyards secured contracts for just 182 ships in the first six months of this year, compared to 561 vessels a year earlier.
Although China saw a 52% drop in orders for new ships in 2011 from levels seen in 2007, it was still the world's largest shipbuilder, accounting for 41% of the global share.
According to a Singapore-based sales and purchase broker, China has some 350 shipyards that are actively in business. An estimated 2,000 yards are currently operational in China. Beijing is targeting the inclusion of five Chinese shipyards among the top 10 in the world by 2015
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China's Stagnant Shipbuilding Sector Gets New Orders
China's troubled shipbuilding sector is returning to lead global vessel construction again, in front of South Korea and Japan, but the headline numbers hide a concentration of orders at a few big yards that could offer a blueprint for the industry's future.
While Chinese shipbuilders have won more business so far this year than in the whole of 2012, just 4 percent of the country's more than 1,600 yards have scored new contracts.
Most had the backing of two shipping "policy banks", which are responsible for state-directed spending and trade development, leading to a suspicion that Beijing is using the lenders as a tool to force consolidation in the bloated sector.
"We believe that the major yards that have won orders this year will be the ones left in five or 10 years and that they represent the future shape of China's shipbuilding industry," said Dr Gunnar Gerig, executive director of transaction advisory services at Ernst & Young in Hamburg, Germany.
The global shipping industry is emerging from a five-year downturn, the worst in 30 years, as cargo demand rises on the improving global economy and low asset prices lures private equity money into the sector.
At the same time, Chinese policymakers are cracking down on overcapacity-plagued heavy industries such as shipbuilding and steelmaking, as they seek to shift the country away from its old investment-driven economic growth model.
Figures compiled by Reuters and shipbrokers show around 60 state-owned and private shipyards won about $10.5 billion worth of contracts from foreign and domestic shipowners for vessels totalling 21.2 million dead-weight tonnage (dwt) in the first half of this year.
Among the winners were shipyards in Shanghai, Guangzhou and Chengxi controlled by China State Shipbuilding Corporation and private builders such as Yangzijiang Shipbuilding (Holdings) Ltd andZhejiang Yangfan.
REVERSING TREND
The volume of orders was "up significantly" versus 19.2 million dwt in full year 2012, said Stephen Gordon, managing director of Clarkson Research Services, a British shipbroking and shipping services company.
Chinese yards won 39.5 per cent of global orders in the first half compared with 36.5 per cent for South Korea, reversing 2012's trend.
The order tally has continued since July with a raft of deals to China Ocean Shipping (Group) Company (COSCO) shipyards in Dalian, Zhoushan and Guangzhou and other facilities including ShanghaiWaigaoqiao Shipbuilding. But the latest deals have gone only to yards that had already won orders this year.
That means that while state-owned and better quality private shipyards now have enough construction orders to keep busy into 2015 or 2016, the future looks grim for the rest, many of whom have already run out of work.
Sverre Bjorn Svenning, director of Fearnley Consultants, an offshoot of Norwegian shipbroker Fearnleys, said the firm has tracked 128 shipyards established during the 2003-2008 boom.
Of those, 57 have not delivered a ship since 2011 and another 18 have delivered three ships or fewer. "In my view, all the 75 yards have in practice ceased operations," Svenning said.
The China Association for National Shipbuilding estimated there were around 1,650 shipyards inChina. Between a third and 50 per cent of them are set to collapse in the next few years according to the lobby group and other sources.
"There are only about 80-90 yards Chinese that we would recommend to our clients presently," said Martin Rowe, managing director of shipbroking firm Clarkson Asia, based in Hong Kong.
POLICY BANKS
The Export-Import Bank of China (Cexim) and the China Development Bank are the country's two policy banks focused on the shipping industry.
A Cexim senior executive told Reuters that around two-thirds of the shipyards that won orders this year were supported with a mix of financial instruments that benefited individual shipyards or ship owners.
These included shipyards controlled by state-owned groups China State Shipbuilding Corporation(CSSC) and China Shipbuilding Industry Corporation (CSIC), COSCO and private yards such as Sinopacific Shipbuilding, said Chen Bin, deputy general manager at Cexim's transport finance department.
Financial support has also come from China Development Bank and domestic and foreign lenders including the Bank of China Ltd and Standard Chartered Plc.
Cexim said it aimed to lend about $3 billion to the shipping industry this year.
Chen said typically about 30 percent would go to Chinese shipyards. The remaining 70 percent would be advanced in the form of buyer's credits and loan guarantees to support foreign and domestic shipowners ordering ships at Chinese shipyards.
Graham Porter, co-founder of Canada's Seaspan Corp, one of the world's largest container ship operators with about 100 large vessels, said shipowners look to order at shipyards backed by state lenders or well-funded provincial or private yards, which represent a low risk.
PREFERRED LIST?
Chen said Cexim backs each deal on its own merit. "Right now we don't have a clearly defined shipyard list. It changes year by year," Chen added.
But Shipping experts told Reuters they thought Beijing was intervening to support favoured shipyards either with a list of yards it wanted to see survive or by directing policy support to the most successful.
"(I) believe the list actually exists," said Tom Behrens-Sørensen, co-founder of strategic advisory and corporate finance firm Navisino (Beijing) Partners and a former chairman in North Asia for shipping and oil services group A P Møller-Maersk A/S.
Shipowners contacted by Reuters, including commodities group Noble, Taiwan's U-Ming MarineTransport and Singapore's Pacific International Lines, acknowledged a "flight to quality" of more financially secure yards and those that have upgraded and can build higher specification ships.
Ravindranath Raghunath, senior vice president at Noble Chartering, said the company preferred state-owned shipyards.
"With the three-year lead time to delivery, (I) am not convinced the private yards will be around at that time," he said, adding that loan guarantees were easier to obtain from banks such as Bank of China if state-owned yards were used.
China's two big East Asian shipbuilding rivals have already seen significant consolidation.
Japanese shipyards went through two such phases during the 1970s and 1980s that were partly government sponsored and reduced shipbuilding capacity by around 50 per cent.
In South Korea, debt problems in the late 1980s also led to a wave of consolidation that shrunk the industry from 11 large and medium sized shipbuilders in the early 1990s to around seven major shipbuilders now, including cash-strapped STX Offshore & Shipbuilding.
Ernst & Young's Gerig said in the long-run the number of surviving shipyards was likely to be larger inChina than South Korea or Japan because labour costs were lower and automation was less of a feature in China's shipbuilding industry.
But, along with other industry experts, he predicted that many smaller yards, and even some major ones, would collapse over the coming years.
"It is quite obvious that the Chinese shipbuilding industry is in a painful transition phase towards an industry that will continue to shrink and the ambitions and goals presented a few years ago will never be fulfilled," said Svenning of Fearnleys.
"I think if the Chinese yards shall succeed they must have a good home market and cannot rely on copying the Korean success of exports."
Souce Link
Bought more today at 3.34. Next year could be huge for EGLE.
No risk no reward, pull the trigger once you do the proper DD.
The Korean Shipping Industry is pushing for Government financial support via a Korea Shipping Guarantee fund worth about $46 billion dollars which should benefit both the Korean shipbuilders and shippers. Estimated timeframe 2014
This should help restore value to the Korean Line Corporation (KLC)and benefit EGLE shareholders. The other benefit is when shipbuilders back-log increases then the cost of newbuilds rise which should restore value of the EGLE shipping fleet.
Wow...what a slump. This is a dangerous point ($3.25), this can plummet further and I am not sure I wanna go for the ride. Thinking about taking loss.
Well if I had the cash I would get that many also. Like the long term value here and this pull back seems to give us another chance to get in.
All the updates here- Q3 transcript
http://www.earningsimpact.com/Transcript/84425/EGLE/Eagle-Bulk-Shipping-Inc----Q3-2013-Earnings-Call
I'm thinking of picking some on open tomorrow.
Thoughts?
5000 shares to start maybe.
I did not even know they owned part of that company. Thanks.
One item to note is that the Korean Line Corporation (KLC) loss is a mark-to-market loss on the KLC stock 005880:KS
KLC stock 005880:KS
EGLE should wait for the KLC stock to recover before selling or swap the KLC shares for real KLC ships.
Like the value here. Just bought in at 3.35. Could be a great long term play. Debt is long term and from your read positive operating cash flow so no issues there. Plenty of time to have rates rise.
Eagle Bulk Shipping: Value Stock, Or Value Trap?
Eagle Bulk Shipping Inc. (NASDAQ:EGLE) engages in the ocean transportation of various bulk cargoes worldwide. The company owns a fleet of 45 oceangoing vessels comprised of 43 Supramax and 2 Handymax vessels with a combined carrying capacity of 2,451,259 deadweight tons. Currently, the company has a market capitalization of just under $77 million and an average daily volume of 1.3 million shares.
Eagle Bulk Shipping
It would be fair to say that the shipping sector has been beaten down for the past few years. However, due a rise in shipment volume of iron ore to China, shipping rates have recently recovered to some extent. That said, daily spot rates are still far away from the highs seen pre-2008. Still, there are deals to be found in the market if you look hard enough and Eagle Bulk Shipping Inc. (NASDAQ:EGLE) could be one of them.
Like the majority of its peers, Eagle Bulk Shipping Inc. (NASDAQ:EGLE) trades at discount to book value. However, care needs to be taken when evaluating a shipping company based on its discount to book value alone. Indeed, many of the shipping companies currently trading below book are hemorrhaging cash and issuing stock to bolster cash flows. I won’t mention any names in particular, but some of these companies do look to be classic value traps.
Eagle Bulk is different
Nonetheless, it would appear that Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is different. Based on the company’s fiscal second quarter numbers, Eagle Bulk has assets of $1.78 billion and liabilities of $1.18 billion. Long-term debt makes up the majority of the company’s total liability figure, standing at $1.16 billion. What’s more, the company has $53.6 million in cash and short term assets on its balance sheet and a current ratio of two. So, the company looks to be financially safe for the next 12 months at least. Debt as a percentage of assets works out at around 65% and interest costs were covered 1.2 times by EBITDA during the first six months of this year.
In addition, shareholder equity works out at around $601 million, or $35.97 per share, indicating that at current levels the company is trading at a price-to-book ratio of 0.13 – a huge margin of safety.
But aside from a strong balance sheet, why is Eagle Bulk so appealing? Well, surprisingly the company has been one of the few shipping companies to remain profitable from 2008 to 2010 and operating cash flow positive since 2008. Indeed, this means that apart from the funding of new ships back in 2010, (in hindsight a bad decision) the company has not issued any new debt or stock to fund operations since 2008.
Eagle Bulk is an interesting play
Eagle Bulk is an interesting play as it would appear that the company has managed to avoid much of the turbulence suffered by its peers during the past five years. Additionally, as the company is currently trading at such a huge discount to book value, the margin of safety here is appealing. As a play on the recovering dry bulk shipping market, Eagle Bulk looks well placed to ride the recovery. Furthermore, investors need not worry about equity dilution or crippling debt issuance while they wait for the market to recover as Eagle continues to turn a profit.
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Long and Strong with 5K shares....holding out for the long term payout
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This board's subject is fundamental and technical discussion about Eagle Bulk Shipping Inc., EGLE.
Eagle Bulk Shipping Inc. is a holding company. Through its subsidiaries, the Company is engaged primarily in the ocean transportation of a range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes. As of December 31, 2006, Eagle Bulk Shipping Inc. owned and operated a fleet of 16 oceangoing vessels with a combined carrying capacity of 796,663 deadweight tons. The Company carries out the commercial management of its fleet through its wholly owned subsidiary, Eagle Shipping International (USA) LLC. Eagle Bulk Shipping Inc. expanded its fleet from 13 vessels to 16 vessels by acquiring the KESTREL I, TERN and JAEGER in June and July 2006, respectively. In August 2007, Eagle Bulk Shipping Inc. announced that it has completed the fleet acquisition from the parent of Anemi Maritime Services, a private Greek shipping company.
477 Madison Avenue
New York, NY 10022
(212) 785-2500
http://www.eagleships.com/
Eagle Bulk Shipping Inc. Reports Fourth Quarter and Fiscal Year 2008 Results
http://www.eagleships.com/phoenix.zhtml?c=189576&p=irol-newsArticle&ID=1261693&highlight=
http://finance.yahoo.com/news/Eagle-Bulk-Shipping-Inc-to-pz-15054442.html
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Best DD for all Dry bulk carriers can be found in the Dryships IBOX by Eastunder
http://investorshub.advfn.com/boards/board.aspx?board_id=10556
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