Says he reads but doesn't exhibit the slightest understanding. Idiot.
If the price stays above $90, the output of Chinese miners won't drop. Some of the smaller miners have ceased production, but the output for the industry is up for H1 this year versus last. That is why rates have not budged. If the big three want to ramp up production, fine, but if they don't drop prices, they will watch it sit at their docks.
Really? Some analyst still thinks about NAV in the shipping sector? Wonder how he feels about people that are underwater on their houses bought in 2007? Are they in good shape since they PAID so much for their houses, even though they STILL are worth half what they paid?
The Chinese miners have not YET pulled back. Not one ton less. They are actually up in the first half of the year versus last year. It is when iron ore gets well under $90 a ton that they will shutter mines in a big way.
Q1 probably will be a loss. Tanker rates weren't all that great. But that isn't why you buy DRYS now. You buy it for what later this quarter brings and the fourth quarter. ORIG will be about doubling it's revenues in Q4 2014 v. Q4 2013. Bulker and tanker rates could be up 500% from here by then.
And it isn't MY math, it was the author's.
"The full Valemax fleet would be able to haul about 44 million tonnes a year to China, which consumes more than two-thirds of the world's 1.2 billion tonne seaborne iron ore trade."
He's assuming LESS than five trips, which would require 100% utilization and full speed steaming the entire time.
"Your math is also wrong. One 400,000 dwt VLOC on a long haul displaces the need for 4 Capes"
It is not. A cape of 175, 000 tons making five trips a year from Brazil to China carries 875,000 tons. A VLOC of 400,000 making the same five trips hauls 2 million. YOUR math is off.
They will have, first, $15 million in net income more than they put up in Q1 from the ORIG dividend. That offsets almost half of the $34 million loss they posted. THEN, they will NOT have the $32.5 million expense for the ORIG redemption. So add $47.5 million to the quarter if the tankers and bulkers come in about the same. Result will be a profit of about $13 million.
for their bulker segment, about $300 per day more than DSX put up for their very similar, but slightly smaller fleet. But DSX has no ORIG shares that pay them $15 million per quarter or a fleet of tankers that will add nicely as well.
They OWNED DSX and DSX put up $65 million in revs with the same expenses. That is what they would need to do to net the same $15 million DRYS gets as a dividend from ORIG. And DSX has NO tankers. DRYS average TCE for it's bulkers will likely be BETTER than DSX for Q2.
And further, moron, they received a $15 million dollar dividend from ORIG in Q2. That is the SAME as if DSX had posted revenue of $65 million in the quarter. They didn't. Your a punk.