Oooops…. Now they have NO decent ships. They do RENT one decent ship. But with the rent, the G&A expenses, the management fees and the voyage and vessel costs, they will lose money on it unless rates for Handymaxes double soon.
And the BDI is suggesting that the turn up in rates that has been so anticipated by many, including myself, has not occurred yet and many are sick of waiting and just getting out. The glut of bulkers has turned out to be an irresistible force and rates an immoveable object this fall.
Everyone is sick of waiting for the much promised and much anticipated rebound in rates. Every day that the BDI fails to rocket north, sellers line up and kick the snot out of the drybulkers. Makes perfect sense as the owners and analysts and followers of the industry assumed that cheap iron ore would lead to more seaborne trade of the commodity. So far, it has resulted in dumping of ore by everyone that has it trying to get what they can as the price collapsed. Eventually those saying imported ore in China will take over a larger part of the market will be correct. It is the law of supply and demand.
Things will suck next year. Russia has sanctions against them affecting some contracts. But, UDW exploration is expected to rise 20% by 2018. And the number of rigs on the water and on order don't meet that rise in demand.
The deal won't ever be "dead". It may not even be postponed. The ceasefire is holding so far. Prisoners on both sides being released. Rebels are getting some of what they wanted as is Ukraine and Russia. When sanctions do get lifted, then the "deal" , which may not even be affected by the sanctions since Norway is NOT part of the EU and NADL is NOT a US company.
You could pull up a chart of cape rates and look at it, I suppose. If you are interested, I can lead you to a great source for such a chart. But what does it matter? Last year was very different than this year. Last year, stocks at ports had fallen to 70 million tons and needed replenished. That is what caused the spike. This year, ore is priced 30% lower and there is dumping of domestic supply going on in large quantities. This will cause a shift to imported iron ore. It takes time. And while it happens, spot rates suffer. Then they run out of domestic high priced ore and don't mine more since they lose money daily trying and spot rates go up.
Yes. Take ore at $75. Chinese domestic producers have COSTS at $90-100 depending on the mine and location. So there is room for $15 per ton for shipping. That's $65,000 per day on a cape from Brazil, $100,000 a day from W. Aus.
True. For today. They are higher today than they were in late October last year. Funny how everyone wants everything TODAY.
Umm… because they have no revenue and they don't pay their bills and they now only have 4 #$%$ old ships that are barely worth the price of the steel. You don't really keep up do you?
August ore exports out of Brazil were 12% lower than last year. This whole pricing thing has Chinese miners and other countries dumping all the ore they can before imports from Brazil and Australia take over completely. It's not if rate scream up it is when. Rates dropped by 50% last year from Sept 25 to Nov 25th then doubled again by Dec. 12. The inevitability of seaborne ore taking over is a fact, it's just taking longer as inventories are worked through at domestic miners, steel makers and shipping hubs for domestic ore.