Buying 6 ships at once, the world's largest listed dry bulk carrier is born!

At the beginning of this year, the dry bulk market began a continuous downward trend. First, BDI fell below the 1000 mark in the second week of the year, and then BDI fell 600 points - all of which happened within a month.

Despite the sluggish dry bulk market, the second-hand trading market for dry bulk carriers has not been affected, and even during the Lunar New Year, trading volume has almost doubled. One of the companies, through a major transaction, rose to become the world's largest publicly listed dry bulk carrier shipping company.Buy 6 ships at onceThis company is listed as the world's largest listed dry bulk shipping companyRecently, Golden Ocean Group (GOGL), a dry bulk carrier, has reached a $291 million deal to purchase six Newcastlemax cargo ships, all of which are equipped with exhaust gas purification systems or scrubbers for 208000 deadweight tons (dwt).It is reported that after the acquisition was completed, GOGL became the world's largest publicly listed dry bulk carrier shipping company in terms of deadweight tons.

GOGL will lease back the purchased 6 ships to their former owners for a lease period of approximately 36 months, with an average daily scheduled charter fee of approximately $21000.The company will fund the current transaction through a new $233 million credit line, which is said to be secured by newly purchased ships and two ships.Ulrik Andersen, CEO of Golden Ocean Management, said, "This acquisition consolidates our position as the largest owner of modern Cape of Good Hope vessels. As we continue to move towards our goal of reducing emissions by 30% by 2030, it has also improved our fleet's fuel efficiency and reduced emissions.""We have taken action against the short-term weakness in asset prices to acquire high-quality assets with strong returns that will comply with all environmental regulations after 2030."Crazy buying and selling of ships within two yearsMost new ships are ordered in ChinaIt is reported that in the past two years, GOGL has achieved a total net profit of approximately $124 million by selling 11 old ships.

The company believes that these profits are sufficient to fund the majority of the expected equity required for its current construction of 10 Kamsarmax new ships and 6 new ship purchases.Most of the new shipbuilding orders placed by the company in the past 2 years have been built in Chinese shipyards:

In September 2021, GOGL announced the order for three Kamsarmax bulk carriers at China Shipbuilding Corporation's Shanhaiguan Shipyard, with a cost of $34 million per order.

 These ships with a deadweight of 85000 tons will be delivered from the third quarter of 2023 to the first quarter of 2024. It is reported that the company has previously ordered and received 8 bulk carriers from Shanhaiguan Shipyard.

In October 2021, GOGL once again built four Kamsarmax bulk carriers at China Shipbuilding Corporation's Shanhaiguan Shipyard, each priced at $34 million, which will be delivered in the third and fourth quarters of 2023.

In July 2022, GOGL announced the construction of three dual fuel Kamsarmax bulk carriers under Dalian Shipyard, with a capacity of 85000 deadweight tons, to be delivered in the third quarter of 2024 and the first quarter of 2025.

According to VesselsValue data, the existing Newcastlemax vessels equipped with washing towers are all manufactured in China, with an average age of 2.5 years.

The financial reports for the second and third quarters of last year were stronger than expectedGOGL hopes for the opening of the Chinese marketDespite trade disruptions and economic headwinds, GOGL achieved strong performance in the second and third quarters of 2022.According to the financial report released by GOGL, the net income for the second quarter of 2022 was $163.7 million, with earnings per share of $82, while the net income for the first quarter of 2022 was $125.3 million, with earnings per share of $0.63. However, 

there was a slight decline in the third quarter, with a net profit of $105 million or $0.52 per share.

The company stated that its main source of revenue comes from its strait type vessels, each of which exceeds the index by $9000 per day, while its main premium comes from the scrubbers installed for the fleet and modern fuel efficiency fleet.

The company stated in its third quarter report that looking ahead to the first quarter of 2023, GOGL has secured a daily rent of $21000 for 4% of its cape type shipping schedules and $21000 for 20% of its Panamax type shipping schedules.Meanwhile, 

the company has predicted in its report that China will gradually reopen in 2023, coupled with stimulus measures, which will drive demand for iron ore and steel. Meanwhile, GOGL predicts that the first and second quarters of this year will still be full of challenges, but with the global economic recovery, GOGL remains optimistic that the market will rebound strongly.It is understood that the company's latest financial report for the fourth quarter of 2022 will be released the day after tomorrow (February 16th).

Good news: The market is showing signs of heating up

It is understood that the Baltic Dry Bulk Index (BDI) has been declining for six consecutive weeks this year, once dropping below 600 points.

On February 10th, the BDI index rose 10 points to 602 points, with a daily increase of 1.7% and a weekly decrease of 3.1%. Among them, the Capesize Bulk Carrier Index (BCI) rose 34 points to 486 points, with a daily increase of about 7.5% and a weekly increase of 13.3%, marking the first increase in six weeks. 

The average daily profit of Cape type ships increased by $281 to $4033.Although currently, based on the dry bulk freight index, the dry bulk market is still in a state of "falling and falling again, difficult to boost". However, many recent transactions in the market have shown increasingly clear signs of rising demand, and dry bulk transportation may usher in a second spring.

01. Since the National Development and Reform Commission allowed four Chinese enterprises to import Australian coal at the beginning of this year, it seems that the further opening of the Australian coal import channel this year is a high probability event. As for how much effective supply can be formed after the lifting of the ban, it depends on the Australian coal production, the demand of competing countries, and the demand of China. Once the lifting of the ban is confirmed, it will greatly boost the dry bulk market.

02. During the harvest season from mid February to mid May this year, Brazilian soybean production is expected to reach record levels, which is clearly very favorable for dry bulk transportation, especially for Camsar, Panamax, and some smaller vessels.

At present, there is no consensus in the shipping industry on the trend of the dry bulk cargo market in 2023. Some industry insiders believe that if opportunities can be seized in a timely manner, the dry bulk cargo market may experience a rebound in the second half of this year.