GoodBulk Optimistic on Capesize Market Recovery

Monaco-based bulker owner and operator GoodBulk delivered a stronger profit for the period ended June 30, 2018, driven by a recovery in the Capesize market.

The company said it remains optimistic that the Capesize market is in the early stages of a cyclical recovery supported by stronger fundamentals on both the demand for tonnage and supply of vessels, as evidenced by the stronger spot rates for Capesizes this year compared to 2017.

During the second quarter of 2019, the company earned an average gross time charter equivalent rate (TCE) of $14,084 per day on its Capesize vessels, USD 13,149 per day on Panamax and USD 12,627 per day on Supramax vessels.

On the demand side, new trade of seaborne coal from the United States to India as well as more longer haul Brazilian iron ore into China on Capesizes have contributed support to this segment.

While GoodBulk is able to invest in dry bulk vessels ranging in size from 50,000 to 210,000 dwt, the company continues “to believe that secondhand Capesize vessels currently represent the most attractive risk adjusted return opportunity.” As such, the company continues to increase its capital allocation to this segment.

The company’s net profit for the second quarter of 2018 surged to YSD 3.6 million, compared to USD 0.8 million seen a year earlier.

For the first six months of the year, GoodBulk delivered a net profit of USD 12.6 million, up from USD 0.5 million reported in the first half of 2017.

The second quarter of 2018 saw a continuation of the improvement in the Capesize market. Volatility continued to remain high, after bottoming at USD 7,051 per day on April 5, 2018, each month of the quarter showed sequential improvement resulting in an average of USD 13,963 per day for the first half of 2018.

This corresponds to a 20.4% increase for the first half of 2018 versus the first half of 2017.

“The Capesize segment is expected to see limited growth until 2020 following minimal new ordering in the last three years and the scrapping wave of 2015 and 2016. This fundamental position of demand and supply could result in a tight market in the remaining months of 2018 with a corresponding response in Capesize spot rates,” GoodBulk explained.