With BDI,Super and Cape indexes at or near all time lows, SBLK has one cape under repair [may get some recovery, warranty insurance, etc.] and one on spot [whatever that may bring]. They also have seven out of eight supers up for contract in 30 to 90 days. Last super,Omicron,is getting $7,500/day for a short contract. Super index now below $9,500/day. No telling how much work and at what price they will get. SBLK does have a history of finding decent contracts as to what the market will bear. All this makes the R/S more of a certainty. Some or all of this may be built into the price. Things may get much better, but for now these are dark clouds.
No question the BDI is still in the toilet. I see the terms, "drowning" and "supply" used a lot together and the BDI is at about the low of the year.
On the flip side, the market cap is about $40 million for a company with fourteen ships. There's a lot of financial leverage and there's a lot of leverage with the inelastic demand curve. It certainly seems like the stock should be traded more like an option at this point. If the industry turns around in 2013, it may be a very nice return.
The rate of growth should be slowing and the demand should catch up over a year or two according to a few sites--then hopefully the pendulum will swing heavily in the other direction for a while.
Almost every article for the past several months has been the same theme. However this is the time when a large number of newbuilds, ordered a couple of years ago, are being delivered. Orders are definitely down despite ship builders trying to do what they can to spur demand for new ships. This oversupply will subside eventually. It's just a matter of who's left after it subsides. I'm fairly certain Star Bulk will survive...but hopefully they won't be adding new shares to the outstanding share count. When the supply corrects, maybe companies will be slower to order new ships.
Certainly not a lot of positive articles on the current industry situation. Have to wait and see.
Best BDI scenario for Star Bulk in my opinion is that the supramax rates stay low for another month...to convince others not to order more ships...and then go up. For the capes, maybe stay low for another year and then go up.