PBK - Aloha my friend. DRYS likely will report another difficult quarter. Negatives will be debt and low fleet utilization (85% or so). They will report negative earnings.
Q3 should see improved shipping rates as they typically do during the harvest time of the year. Assuming GE gets the loans refinanced, DRYS pps will begin moving up in a serious way. The risk, of course, is that the loans are called, the ships foreclosed on, and the potential of DRYS filing for bankruptcy as a result. My belief is if any of this were going to happen, it would have already.
On a macro level, there is still more work needed to reduce overall cape and panamax tonnage. As of this past Friday (5/6) the fleet had been reduced by roughly the equivalent tonnage of 2 capes and 7 panamax versus December 2014. Owners are doing a good job of flattening out growth. Shipping rates are still a function of supply and demand though. My estimate at the end of 2014 was the fleet needed a 5% reduction in order to become profitable. Since then demand has been growing at roughly 2% per year. If the fleet remained at approximately the same size as it ended 2014, supply and demand curves should cross sometime during Q4 2017. Over the next 5-6 quarters rates will be improving, but with a lot of volatility.
Moving back to DRYS, the most significant impact is the debt re-fi. I am looking for news one way or the other.
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