We are facing a supply situation far more severe than anyone seems to understand.
The historic 2003-2008 bull market led to a decade of oversupply in drybulk. Owners ordered more ships during the bull market than ever seen before.
Everyone lost money and the cautionary tales regarding ordering of newbuilds has been told a million times.
There's another side to this story that seems to have been forgotten. When you order that many ships in such a short period of time, those ships get old at the same time!
Apr 6, 2023 • 6 tweets • 2 min read
1/ In shipping money is made by finding cheap optionality. It’s an inefficient market that on occasions give you great opportunities.
For me the greatest optionality is now to be found in #drybulk equities.
2/
Let’s take a look at $gogl. As reported in their previous presentation, they are currently making $8k more than index rates due to premium fleet and scrubber. With a cash break even of 11700 the company only need $4k index rates to survive another day.
Mar 18, 2023 • 8 tweets • 2 min read
#Drybulk Thread: 1) Drybulk is currently showing signs of a beautiful generational setup. With macro volatility increasing rapidly, there is no saying where equities might trade in the next couple of weeks, but this is the time to be prepared.
2) Before I lay out the bull case I think it's worth looking back at 2020-2022. I would argue this whole period should be written off as a "one off."
2020 was the beginning of COVID. World shut down. Rates went to zero in Feb and Mar.
Sep 23, 2021 • 5 tweets • 2 min read
1/ "It's a one-off"- Tanker market
Even after a few busy days, the VLCC TD3 FFA curve is still at depressed levels.
Spot rates (non-scrubber): $0/d
Q4: $12k/d
Cal 22 $16k/d
Cal 23 $24k/d
"There are too many ships and not enough cargo"
$FRO $DHT #Tankergang2/
If you look at the current state of the market, this might be true, but shipping is all about optionality.
Bull markets are more often than not triggered by an event. Once it's over, all the analyst, traders and brokers will say: " The rally was due to a one-off event"
Apr 11, 2021 • 8 tweets • 2 min read
1/8 As we move closer to EEXI and other regulations we will see different narratives emerge. Many think non-eco ships will be useless overnight.
So what are the risks when buying a non-eco 2010 blt Kamsarmax today?
Let's take a look at the fleet in more depth.
The total number of Capesize+ vessels in the world is 1860.
177 are built 2005 or older. = 9.5% of the fleet.
1124 are built before 2013 = 60% of the fleet.
After 2013 we saw improved energy efficiency and they are often referred to as Eco.
Apr 9, 2021 • 11 tweets • 4 min read
1/ Thread: Commodities vs Hubris
Every commodity bull is wrestling with the same question at this moment: I'm seeing the best set up for a mega cycle in my life time, but I also see financial bubbles everywhere.
#shipping#grains#oil#uranium#Commodities2/ Do I need to wait for a crash in markets before I go in or will I be late? Will markets rotate into cyclical or will my portfolio get wrecked when the hubris in ESG, tech and NFTs comes to an end?
Mar 20, 2021 • 11 tweets • 4 min read
1/
I know I spam twitter with bullish tweets about #drybulk. There's a reason why I'm pounding table on this one. This might be the only(!) chance you will get in your life time to participate in a mega cycle. Remember, it's 18 years since the last one started.
2/ Let's start with the demand side.
There's two drivers of demand. Demand for the commodity and supply of the commodity. Infinite demand for iron ore doesn't help if there's no supply to put on ships. But they are connected. ---
