2022 Shipping bitez #1

Investment Analysis Clubs Macro Economic Trends and Risks
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Okay, we are in a new calendar year, so time for some updates

1.Sector summary
Really helpful intro on a couple of sectors from one shipping broker (Intermodal).
Left column Page 1 highlights two size categories on the container side and the smaller category on the dry bulk side (Handysize)
https://www.hellenicshippingnews.com/wp-content/uploads/2022…

1a. Container vessel values
If you’ve possibly skimmed through that first column, one can now jump to page 5, and see a few examples of this at play. The first line-item is a direct example of what was discussed in the earlier column- a Panamax size container vessel. The vessel is over 18-years-old, and a major liner company is paying out $55M for such a vessel. Not a perfect reference, but in mid 2021, Global Ship Lease (GSL) purchased 4 slightly larger 5000-TEU vessels enbloc and 10-yo for $148M, or about $37M each). The other two container vessels are newer but smaller vessel sales. Again, not a same type comparison, but close enough - slightly larger newbuilds delivering to Euroseas in mid-2023 for $38M each
http://www.euroseas.gr/press/esea063021.pdf

  1. Weak dry bulk market
    The seasonally slow first two months of the year seems to be playing out. Six straight losing days has seen the BDI index tumble to its lowest levels since March 2021. Mentioned in another thread, there were a bunch of dry bulk vessels detained in Indonesia with coal cargos. Some of those vessels have been allowed to deliver their cargos. Brazil has its usual rainy weather that could impact loading and vessel exits for a little while. Plus, this year (2022) the market has to deal with China hosting the Winter Olympics (More on this market later)

  2. Conventional tanker market
    Only two profitable tanker routes
    a. Baltic-to-UK/Continental (dirty)
    b. Cross Mediterranean (clean)
    (Page 2 Intermodal link)
    Certainly this sub-sector is still hurting and will continue hurting for a little longer. On the flip side, there seems to be a market with some liquidity (Page 4 shows multiple trades with only one a distressed-type sale). FWIW, some US investors might take some pleasure in seeing TMS Tankers going through a rough period. TMS Tankers is an entity backed by George Economou (of DryShips shenanigans)

  3. LNG Tankers
    Other than a couple of $100K 1-year charters fixed in Nov-Dec 2021, haven’t seen much news of LNG tanker rates. Just a guess, if there any spot or market-related fixtures trading now, those are likely in the $200K-$300K range. Also, note (on Page 6 or earlier link) that 11 orders for newbuild tankers were placed in the past one or two weeks. At least seven of the new tankers are based on time-charter contracts.

  4. Other
    An item noted on Page 8 regarding the Vroon family business. Company is involved in two depressed sub-sector of shipping: Offshore and tankers. Offshore services had been heavily impacted even prior to the Covid pandemic, and seemed to be getting worse until more recently. There seem to have been some green shoots - deepwater contracts in Brazil, GOM.

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HohumYNWA shipping port:
My top 3 shipping picks are either completely (GOGL,SBLK) or partially (NMM) involved with dry bulk shipping. So far, in 2022, I have “touched” each of the top 3 names. Mostly selling of higher priced shares on positive bounces. That said, even with the BDI trending downwards currently, I am somewhat more optimistic that dry bulk will have a reasonable year in 2022. Similar to 2021 would be okay by me. Having tinkered with the dry bulk ETF (BDRY) in 2021, and generally had a positive outcome with BDRY trades, I think it will be part of the shipping port strategy (watching BDRY for now, but will likely nibble around Chinese New Year).

For some of the individual names e.g. GNK, SBLK, GOGL, the strength of the general dry bulk shipping market was demonstrated by the ability of these companies to pay a dividend. A variable dividend, at that. I think their respective management teams are being quite candid when they say their respective teams will evaluate the respective company’s situation during the quarter, or at the end of the quarter, and decide the dividend then.

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A breakdown on the monthly/weekly chart trendlines for the Baltic Dry Index:

https://mobile.twitter.com/peregreine/status/148230773354632…

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I am somewhat more optimistic that dry bulk will have a reasonable year in 2022. Similar to 2021 would be okay by me.

The risk here is a global recession as the central bankers tighten their respective money supplies and raise rates. When China raises rates to cut off their inflation is unknown that could come much later as Volcker did late in the 1970s instead of a FED chair doing it substantially in 1973 or so.

How deep that recession goes is unknown. But for your medium term plans possibly problematic.

You have me on ignore for discussion pollution and climate change. Open discussion on this board has somewhat shutdown for me with four or five people. That is okay. I am sure a few others are in the same position for caring about the environment or climate.

I read your posts as they dig deep into FA and create a good part of a thumb on the pulse of the global economy. Knowing a pulse in the doctor’s office is just one metric.

I am getting a lot out of the MeTAR board. Having arguments over common sense is not an objective of being here. So a few people ignoring me allows me to avoid their lack of common sense while I continue to benefit from the readings. In this case it is not looking at the broader economic picture while only having found the pulse.

Thank you

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You have me on ignore for discussion pollution and climate change. Open discussion on this board has somewhat shutdown for me with four or five people. That is okay. I am sure a few others are in the same position for caring about the environment or climate.

I read your posts as they dig deep into FA and create a good part of a thumb on the pulse of the global economy. Knowing a pulse in the doctor’s office is just one metric.

I am getting a lot out of the MeTAR board. Having arguments over common sense is not an objective of being here. So a few people ignoring me allows me to avoid their lack of common sense while I continue to benefit from the readings. In this case it is not looking at the broader economic picture while only having found the pulse.

Thank you

News to me. As much as it might be useful to have an “ignored fools” list, I have opted not to create or keep one.

Instead, I am attempting to follow the Spiderman principles. If you are not familiar with those, it is something referred to as “Spidey senses”. Whenever danger arose, Spiderman indicated his “spidey senses” would go off. While I have not been bitten by a radioactive spider, I can still use my spidey senses and stay away from certain threads - I mean we are operating in the World Wide Web, which has some dark spots and dark characters (separate from those that operate in the dark Web)