All the articles I've seen expect the supply to continue to suppress shipping rates over the next few months.
For the remainder of this year, it looks like slippage (delay in deliveries) may occur as ship buyers want to the orders to be delivered next year so the vessels seem one year newer. Thought it would seem the deliveries will start up again in January, maybe the slippage will give some reprieve.
From this article, http://en.eshiptrading.com/news/d/222/2944/ , it looks like there will around 400 deliveries for the rest of this year. Scrapping, if it stays at the same rate of 1.6 ships per day, should take away 200 of those out of the fleet.
Star bulk probably isn't affected too much for the capes since all but one the capes are chartered at much higher rates well into 2013, 2013, 2014, 2015, and 2021.
The supramax rates for Star Bulk may be hurt as those expire mostly Aug, Sept, Oct coming up. If I remember, Star Bulk said they would lose $1 million per quarter for every $1,000 below a $13,000 daily rate. Since the spot rate is about $9,000, Q4 would lose $4 million according to that formula. Star Bulk previously said they had $40 million in cash.
Into 2013 most of the remaining orderbook should be delivered and new orders have already been heavily subsiding. It looks like it's still a waiting game, though.
Supramax Rates Decline Further On US Drought. This last week, the US drought brought down supramax rates to their lowest level since February to $8,860/day. The USDA estimated that this season’s corn production would decrease by 17% (or 56 million fewer tons of corn) due to the drought affecting US farms. The US exports more than 25% of its corn and the loss of production will further weaken the dry bulk environment.
The author tries to make the case that dry bulk company, Dryships, should be valued based on the BDI. The problem with that thesis is that the BDI is an index of the current rates...while dry shipping companies should be valued on expected future returns. I would say a better proxy would be ship values since they should be bought and sold based on their expected future returns by people who are very familiar with the industry.
It's going to get much better at some point. It's just plodding through the mud to get there. With Star Bulk's capes under contract well into the future, those seem good. Star Bulk also has enough cash to take a loss for a while if the supramax rates don't move back up. I'm fairly confident that Star Bulk will be alright...as long as Star Bulk doesn't dilute, it's just a matter of how much lower the price will sink before investors start seeing the glimmer of light at the end of the tunnel.