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Euroseas Ltd. Message Board

  • beto_la beto_la Jan 9, 2014 9:14 PM Flag

    Impact of charter renewals

    Tiger Bridge was renewed in Nov 2013 for 7 months at a 13.3% rate increase.
    Charterer exercised option in Nov 2013 to extend Manolis for 6 months at a 6.6% increase.
    Ninos was renewed in Dec 2013 for 10 months at a 6.6% increase.
    Pantelis has just been renewed for two more months - 11.6% increase.

    Number of renewals coming up:
    February 3, March 2, April 4, May 1, June 1, Sept 1, Oct 2
    Three vessels have charterer's options for 12-month extensions at rates favorable to ESEA.

    The new rates to be announced during the February through April period should provide a pretty strong indication of future profitability. The impact of these increases should begin to show up in the second quarter report due out in August.

    My guess is minimal improvement in loss for 4Q 2013, near breakeven for 1Q 2014, small profit for 2Q, but with rate increases pointing to moderate improvement in subsequent quarters.

    Sentiment: Hold

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    • I completely concur.

      Sentiment: Strong Buy

    • bdi doubled and tripled and you say they renewed charters at a 6.6% increase . WOW!!!! thats great. Any ideas how they will pay for new ships

      • 1 Reply to csbordone
      • Capesize rates went up fast in November and December, but Handymax and Panamax rose less quickly. I suspect the negotiations for the Nov 2013 renewals were done around September, so the big BDI increases aren't reflected in the Nov renewals, but they should be in the upcoming round of negotiations. I suspect that the BDI may go back down as quickly as it rose, but if it doesn't, then profitability should come that much faster.

        I'm not cheerleading for a 6.6% increase. I'm just trying to figure out what the impact of the charter renewals might be. If you disagree with the analysis, let's hear your reasons. I'll stick by my previous point. It's the new charter rates, and not the BDI, that will be a major factor in any return to profitability.

        As far as how they'll pay for the new ships, you already answered that.

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