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Genco Shipping & Trading Ltd. Message Board

  • end2war end2war May 21, 2012 11:24 PM Flag

    Rate Futures anticipate a 62% increase in Bulk Shipping rates by the end of the year

    "Forward freight agreements, traded by brokers and used to bet on future costs, anticipate a rebound, with fourth-quarter rates being traded at $14,325, or 62 percent more than now, Clarkson data show."

    Note also that total cargoes are also expected to be up over 20% since 2008...

    http://www.businessweek.com/news/2012-05-21/norden-profits-from-cargo-strategy-even-with-rate-slump-freight

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    • End2... just for chuckles I ran a revenue projection using the Q4 FFAs and compared it to the current rates to see what affect the rate change would have GNKs revenue.

      If you assume that each ship is earning the current rate of its class (which, of course, it is not).

      And if you assume that each ship will be able to earn the Q4 FFA of its class (which, of course, it will not)

      And if you assume that each ship will earn its class rate for an entire 30 day month...

      Then GNK would realize

      1.392m addl revenue from the 9 Capes

      148.8k less revenue from the 8 Panas

      962.4k less revenue from the 17 Supras

      929.1k less revenue from the 19 Handys

      For a net DECREASE in revenue of 647.3k

      Again... see assumptions above.

      But the future rate environment does NOT favor GNK's ability to improve its financial situation. Capes will do better, but declines in everything else overwhelm the benefit provided by improving Cape rates.

    • You quoted the rate for Capes, not for other classes of ships.

      The Q4 FFAs for all of the other classes are DOWN from current levels, not up.

      The Pana rate is down 6%.
      The Supra rate is down 16%.
      The Handy rate is down 17%.

      So it's great that Capes will be up. The increases that GNK, hopefully, realizes there should offset the DEcreases it will realize elsewhere in its fleet.

      As for the Capes... 4 are up for renewal in Q3 when rates will be 22% higher than today. 3 are up for renewal in Q4.

      Of course, GNK could trade the Q3 renewals spot for a month or two in hopes of bagging a better rate in Q4. But if they blow it, the Q1 13 rates fall back to essentially the same as Q3 12 rates.

      Regardless...

      GNK needs a 70% average increase in TCE if it has a prayer of generating the cash that will be needed service its debt.

      That still doesn't appear to be in the cards. At least not between now and Q2 13.

    • Well today Q4 is about 13,500 and it was about 15,000 a week ago.
      The FFA mkt follows the spot, so as the spot was rising so did the FFAs but now it is falling.

      The FFAs is just like equities... it is only an expectation. Look what the expectation was for GNK... and look where it is now.

 
GNK
7.15-0.03(-0.42%)Aug 4 4:02 PMEDT