Replies to post #11822 on DryShips Inc (fka DRYS)

[Joe Somebody]

In my view, the situation does not look great..

GE is a smart man; he diversified his assets among his companies.

Looks like, ORIG in a tough position and he gave back DRYS's leverage to save ORIG. Basically, it's share buy back for ORIG.

At the same time, to sweeten the situation for DRYS, he relocated a few ships with debt to his other entity.

[Net-Man]

GM PBK - The path forward for dry bulk still requires significant reductions in the fleet. The order book has a lot of ships scheduled for delivery this year:

135 Capes ~27 mdwt or 8.7% fleet growth
191 Panamax ~14.5 mdwt or 8% fleet growth

Considering that total tonnage that would be shipped using these types of ships is likely to contract again this year, it would seem that continued scrapping, delayed delivery, or cancellations are needed to stabilize the markets. In the first 3 months this year, owners have scrapped more than has been delivered resulting in net reductions of Capes and Panamax ships of ~0.8 mdwt. It is unclear if that can continue though. Consider the following:

Built before 2001
187 Capes 37.6 mdwt
407 Panamax 29.8 mdwt

Current total fleet
1624 Capes 309.9 mdwt
2430 Panamax 194.8 mdwt

My assumption has been that a 5% fleet reduction is needed or a matching increase in demand in order to get rates back to a point where it is a profitable business to be in.