Dry bulk carrier company is seriously under pressure

Dahlman Rose, the New York investment bank, warned in a public report that there is a serious problem of oversupply in the dry bulk shipping industry, and the market conditions will not improve much before 2014. Affected by the slump in rents and ship prices, the current balance sheet of dry bulk shipping companies is worse than the worst market conditions at the end of 2008. The industry is hiding loan defaults and “catastrophic” bankruptcy crisis. The average daily rent of Haitang-type vessels has fallen for 30 days, and the total has fallen by nearly 80%. Below the break-even point, shipowners can only “burn money”.
Although the Baltic Dry Bulk Comprehensive Freight Index (BDI) just fell 14 days last Monday. However, according to the Baltic Shipping Exchange of London, the average daily rent of the main type of sea-going vessels in the industry has been falling for 30 days, and the weekly is reported at 4,977 US dollars. The operating cost of the ship type is at least 7,000 US dollars per day. Below the break-even point. If the rent continues to be sluggish, not only will the shipowner's income be directly reduced, but also the problems of declining derivative ship prices and loan defaults, and shipping companies with insufficient liquidity will bear the brunt.
Haitang boat rents 20,000 yuan a day
Dahlman Rose pointed out in the report: "The long-term prospects of the dry bulk shipping market are still guaranteed, but based on the forecast of supply and demand of shipping capacity, the ship type market is likely to have no significant improvement from 2014 to 2015, at least in the middle. It is still fragile in the short term.” The bank said that the spot rent level can no longer support the shipowner's daily operation. Although it is still expected that the average daily rent of the Capesize ship will be US$20,000 this year, it is pessimistic about the market's sharp rebound during the year. .
Executive Director Nokda said that the industry is not optimistic about the prospects, and the value of dry bulk carriers is moving to the lowest level two years ago. When the shipowner uses the ship as collateral for financing, the ship price plunging will increase the loan-to-value ratio and the default risk will increase. Therefore, the shipping company’s balance sheet has once again become the focus of the industry after the trough at the end of 2008. .
At the end of 2008, although the value of dry bulk carriers fell to a low point, many shipowners were facing loan defaults. However, many shipowners held long-term ship charter contracts for several years. The income helps to prevent some shipowners from violating the loan contract.
The shipping company’s operations are severely under pressure
Analysts at Dahlman Rose believe that dry bulk shipping companies are under greater pressure on their assets and liabilities than they were two years ago, and are more “catastrophic” in bankruptcy risk because they compared the worst-case market conditions at the end of 2008. At present, there are no long-term lease contracts for ships, and there are also many charter contracts with rents above the spot level that are about to expire. In addition, a large number of shipping company loan repayment allowances entered into two years ago will also expire. If the shipowner fails to enter into an ideal lease for the ship, the new repayment grace limit will limit the growth of the shipping company and will also weaken the company's ability to adapt to market changes. Both make the shipowner's financial environment less desirable, and shipowners must ensure sufficient liquidity and prudent management of the fleet.
Nokda said that the bank has lowered the investment rating of some listed shipping companies, and analysts have noticed that many internationally renowned dry bulk shipping companies have higher loan-to-value ratios than normal, including Greek shipping companies. Genco, Excel Maritime and US shipping company Eagle Bulk have loan-to-value ratios ranging from 78% to 87%, which is higher than the highest loan agreement of 77%. He said: "If the ship's asset value drops another 10%, there will be more shipping companies crossing the border, and the loan-to-value ratio will even reach 85% to 95%."
Unexpectedly, when is the worst time?
The dry bulk shipping market is still a stagnant water. Even if the rent will drop in recent months, it will take two to three months to return to the desired level. John, the old Greek ship brokerage company, N. Cotzias. Gozias described the dry bulk shipping market as being full of uncertainties, and it is difficult to estimate when the worst time will pass. He said: "The reason why the market conditions are so bad can not be found from the macroeconomic data, because the data of all parties show that the global economy has recovered from the lowest point. I think the key is the number of new ships, which cannot be absorbed by the seaborne demand. Coupled with the different natural and man-made disasters that have occurred in various places, the changes in shipping trade routes have intensified the pressure on the industry."

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