We could also look into how much of their business is on contract vs. spot market. I doubt that 100% of their business is contract at high TCE rates. In my personal opinion, shipping rates should drop, you hold the stock for the dividends for the next 10 years and wait for the next hurricane or war to dump it.
If you see a flaw in my logic or examples here, please point them out, I'm more than willing to be realy really wrong as I have mentioned before. I would rather be an idiot on paper than with my money though.
#1---
"That is, if its second-quarter earnings report doesn't do the job for you already. Revenues were down 31% year over year to $51.5 million and net income dropped 72% to $12.1 million. Time charter equivalent rates, a standard industry measure, slipped from $34,691 last year to $20,603 this quarter. The Capesize class of ships time charter rates dropped from $59,052 to $31,829 year over year."
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#2----
"The forecast growth in tanker supply during 2006 of 5% to 7% may limit potential increases in freight rates. Increases in fleet size are forecast in all vessel categories, with the highest increases for the Panamax and Product Carrier sectors."
"Tanker supply increased by 2.8%, or 8.7 million dwt (4.1 million dwt during the first quarter and 4.6 million dwt in the second quarter) in the first half of 2006 from year-end 2005 levels. While there was growth in all vessel categories, the highest percentage increase occurred in the Panamax sector, where tonnage increased by 8.0% since the beginning of the year. VLCCs, on the other hand, experienced the lowest percentage growth at 1.8%. This additional tonnage exerted downward pressure on TCE rates and is a key factor as to why rates during the first half of 2006 were lower than 2005 in all vessel categories except VLCCs."
International Flag VLCCs Spot Market TCE Rates
Aframaxes in the Caribbean
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 2006 2005
Average $ 25,300 $ 28,400 $ 31,600 $ 32,700
High $ 42,000 $ 49,000 $ 49,000 $ 65,000
Low $ 13,000 $ 17,000 $ 13,000 $ 17,000
International Flag Panamaxes
Spot Market TCE Rates
Panamaxes - Crude and Residual Oils
Caribbean to U.S. Atlantic Coast
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 2006 2005
Average $ 21,200 $ 25,800 $ 23,800 $ 29,400
High $ 29,000 $ 35,000 $ 34,000 $ 57,900
Low $ 17,000 $ 10,000 $ 17,000 $ 10,000
International Flag Handysize Product Carriers
Spot Market TCE Rates*
Handysize Product Carriers in the Caribbean and trans-Atlantic
Three Months Ended June 30, Six Months Ended June 30,
2006 2005 2006 2005
Average $ 20,000 $ 21,300 $ 22,600 $ 24,700
High $ 24,000 $ 31,800 $ 35,900 $ 33,000
Low $ 15,300 $ 14,000 $ 15,300 $ 14,000
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