Explains the over-reaction in GNK today, even though they only have one frigging ship on contract with KLC.
Funny, I've never even heard of KLC before, but they appear to have been a pretty big player in the drybulk space - own 43 ships, and have another 100 or so on (money losing) charters contracted to other ship owners, the biggest being Eagle (13), which is why it got pummeled even worse than GNK today.
"It is a reminder to everybody that even if you have charters in place the owners might not always be there to honour them,” a top analyst told TradeWinds earlier today."
How low will what go, the BDI or our stinking stock price? I'm sick to my stomach for not selling last week at $14.40 like I was contemplating, a big loss in profit from as recently as Jan 6th when we traded around $15.40, but noooooo....hold on dude, just ride out the dip.....
*I'm* the dip(s-h-t) for not listening to what my gut was telling me to do, which was to bail. Now it's all gone, with the downgrade we got crushed to the tune of -8.5% (so far) and I'm back to even, my 35% profit is gone. Crap! And my 30% gain in DSX is almost gone too. DOUBLE CRAP! And I guarantee if I sell either they'll pop back, I'm scr-wed either way.
seeking equilibrium. shipping rates are rather inelastic. if you don't have at least 15 000 tonnes of something to send across the ocean, you don't really need a drybulk. and if you have 15 000 tonnes of something, you were probably anticipating this and already have a ship lined up long before.
maybe this year will bring a bumper crop in every food commodity. maybe the world will build 5 million more cars than anticipated. the demand picture is consistently underestimated. 500-600 extra ships (i believe that's about where we're at) into a market of about 7 000 ships is a 7% oversupply.
on the bright side, these shipping rates will temper global inflation rates. and subdued inflation helps keep interest rates low. and if interest rates stay low, it encourages stronger economic growth. and stronger economic growth results in more drybulk ship charters....