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Navios Maritime Partners L.P. Message Board

  • alienation_666 alienation_666 Dec 19, 2012 8:24 AM Flag

    Let's Educate/Expose the Short Myths on NMM

    Time to expose the short myths on NMM. To start, take a look out the article Seeking Alpha printed on 12/4/12 titled "Have We Seen the Bottom in the Dry Bulk Industry?". It contains some excellent data.

    So let's look at the short thesis on NMM:

    1. The Baltic Capesize Index (BCI) has been on a decline since 11/22/12.
    2. While the Baltic Dry Bulk Index (BDI) rallied from 9/27/12 through 10/23/12, seasonal effects will slow this index.

    NMM has long term charters for most of its fleet and thus should not be exposed to seasonal effects.

    3. 79% of all Capsized vessels in the world are under 15 years old and 73% of the Panamax fleet is under 15 years old.
    4. The Capsized fleet is expected to grow by 4.3% in 2013 while the Panamax fleet is expected to increase by 11.9%.

    Once again NMM has booked long term charters for most of its fleet and new building contracting for dry bulk carriers has declined 56% on a YoY basis. Shipyards have declined 40% YoY in 2012 and the scrap rate is on the rise.

    5.Once NMM's long term charters run out, NMM will be faced with a more difficult environment.

    Many market pundits are forecasting an improvement in the world economy next year. China' whose growth was slowing has recently seen a pick up in its growth. Steel demand is expected to grow by 3.2% in 2013. China, which accounts for 67% of overall Capesize charters, has seen its iron ore stockpile fall by 10% sequentially and 18% YoY in November. According to JP Morgan, there is room for a 30% increase in China's stockpile of iron ore.

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