Q1 2025 Star Bulk Carriers Corp Earnings Call
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Star Bulk Carriers conference call on the first quarter 2025 financial results.
Thank you for standing by ladies and gentlemen, and welcome to the Star bulk carriers conference call on the first quarter 2025 financial results.
Operator: We have with us today Mr. Petros Pappas, Chief Executive Officer, Mr. Hamish Norton, President, Mr. Simos Spyrou, and Mr. Christos Begleris, Co-Chief Executive Officers, Mr. Nicos Rescos, Chief Operating Officer, and Ms. Charis Plakantonaki, Chief Strategy Officer of the company. At this time, all participants are on a listen-only mode. There will be a presentation, followed by a question and answer session, at which time, if you wish to ask a question, please press star on your telephone keypad, followed by, I'm sorry, star one on your telephone keypad, and wait for your name to be announced.
Speaker Change: We have with US today, Mr. Petros Pappas, Chief Executive Officer, Mr. Hamish Norton President, Mr. Cmos Spiro and Mr. Christos <unk> co Chief Executive officers, Mr. Nicos, <unk>, Chief operating officer, and MS tourists pockets of Lucky Chief strategy officer of the <unk>.
Company.
Speaker Change: At this time all participants are in a listen only mode. There will be a presentation followed by a question and answer session at which time if you wish to ask a question. Please press star on your telephone keypad, followed by I'm, Sorry Star one on your telephone keypad and wait for your name to be announced I must advise you that this conference is being recorded.
Operator: I must advise you that this conference is being recorded today.
Simos Spyrou: We will now pass the floor over to one of your speakers for today, Mr. Spyrou. Thank you, sir. Please go ahead. Thank you, Operator.
Speaker Change: Today.
Speaker Change: I'll now pass the floor over to one of your speakers for today Mr. Spiro. Thank you Sir Please go ahead.
Speaker Change: Okay.
Spiro: Thank you operator increase those big Lares co Chief financial Officer of Starbucks carriers, and I would like to welcome you to our conference call regarding our financial results for the first quarter of 2025.
Christos Begleris: I'm Christos Begleris, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to our conference call regarding our financial results for the first quarter of 2025.
Christos Begleris: Before we begin, I kindly ask you to take a moment to read the Safe Harbor Statement on slide number 2 of our presentation. In today's presentation, we will go through our first quarter highlight results, action taken to create value for our shareholders, cash evolution during the quarter, an update on the Eagle Bulk transaction, vessel operations, fleet update, the latest on the regulatory front, and our views on industry fundamentals, before opening up for questions. Let us now turn to slide number three of the presentation for a summary of our first quarter 2025 highlights. For the first quarter of this year, the company reported the following.
Spiro: Before we begin I kindly ask you to take a moment to read the safe Harbor statement on slide number two of our presentation.
Spiro: Okay.
Spiro: In today's presentation, we will go through our first quarter highlight result action taken to create value for our shareholders cash evolution during the quarter and an update on the Eagle bulk transaction based on operations fleet update the latest on the regulatory front and are.
Spiro: Use on industry fundamentals before opening up for questions.
Spiro: Let's now turn to slide number three of the presentation for a summary of our first quarter 2025 highlights.
Spiro: Yeah.
Spiro: For the first quarter of this year the company reported the following.
Christos Begleris: Net income amounted to $0.5 million with adjusted net loss of $7.8 million or $0.07 adjusted loss per share. Adjusted EBDOT was $49 million for the quarter. During Q1, we repurchased 1.3 million shares for a total consideration of 19.6 million. For the first quarter, we declared a dividend per share of five cents payable on or on June 6, 2025. Despite the fact that no dividend would be due based on our existing dividend formula, our Board of Directors decided to continue prioritizing returns to shareholders given the company's strong position. Our pro forma total cash today stands at $437,000,000.
Spiro: Net income amounted to 0.5 million if adjusted net loss of seven 8 million or 0.07 adjusted loss per share.
Spiro: Adjusted EBITDA was 49 million for the quarter.
Spiro: During Q1, we repurchased one 3 million shares for a total consideration of $19 6 million.
Spiro: For the first quarter, we declared a dividend per share.
Spiro: <unk> payable on or on June six 2025.
Spiro: Despite the fact that no dividend would be view based on our existing dividend Formula Our board of directors decided to continue prioritizing returns to shareholders given the company's strong position.
Our pro forma total cash today stands at 437 million.
Christos Begleris: Meanwhile, our performance total debt stands at $1.2 billion. Through an un-drawn revolver facility we have additional liquidity of 50 million, resulting to proformer liquidity of almost half a billion. Finally, we currently have 13 debt-free vessels with an aggregate market value of $270 million. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was 12,439 per vessel per day. Our combined daily OPEX and net cash G&A expenses per vessel per day amounted to $6,217. Therefore, our TCE less-OPEX, less-Cas-GNA is around $6,220 per day per vessel.
Spiro: Meanwhile, our pro forma total debt stands at one 2 billion.
Spiro: Through an undrawn revolver facility, we have additional liquidity of $50 million, resulting to pro forma liquidity of almost half a billion.
Spiro: Finally, we currently have 13, <unk> vessels with an aggregate market value of $270 million.
Spiro: On the top right of the page you will see our daily figures probation for the quarter.
Spiro: Our time charter equivalent rate was 12439 per vessel per day.
Spiro: Our combined daily Opex and net cash G&A expenses per vessel per day amounted to 6217.
Spiro: Therefore, our TCE less opex less cash G&A is around $6220 per day per vessel.
Christos Begleris: Since the EcoVal transaction was completed on April 9th, 2024, until today, the synergies achieved from the integration resulted to almost $40 million.
Spiro: It seems the Eagle bulk transaction was completed on April nine 2024 until today the synergies achieved from the integration, resulting to almost $40 million.
Christos Begleris: The integration process has been completed across all departments.
Spiro: Integration process has been completed across all departments.
Christos Begleris: Slide four provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company, increase the intrinsic value of our shares, and return capital to shareholders. In total, since 2021, we have taken actions of $2.6 billion in dividends, share buybacks, and debt repayments to create value for shareholders. At the same time, Star Bulk has been growing the platform at opportune times through consecutive flip buyouts by issuing shares at or above net asset value. On the bottom of the page, we show our Net Debt Evolution Professionals.
Spiro: Slide four provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company increase the intrinsic value of our shares and return capital to shareholders.
Spiro: In total since 2021, we have taken actions of two 6 billion in dividends share buybacks and debt repayments to create value for our shareholders.
Spiro: At the same time star bulk has been growing the platform at opportune times through consecutive fleet buyouts by issuing shares at or above net asset value.
Spiro: On the bottom of Abates, we show our net debt evolution probation.
Christos Begleris: Since 2021, our average net debt per vessel has decreased from $11.6 million per vessel to $5.4 million per vessel, which corresponds to a reduction of more than 50%. As a result of this deleveraging process, our current net debt is covered by the fleet scrap value.
Spiro: Since 2021, our average net debt per vessel has decreased from 11 6 million per vessel to five 4 million per vessel, which corresponds to a reduction of more than 50%.
Spiro: As a result of this deleveraging process, our guided net debt is covered by the fleet scrap value.
Christos Begleris: Slide 5 graphically illustrates the changes in a company's cash balance during the fourth quarter. We started the quarter with $441 million in cash. We generated positive cash flow from operating activities of 49 million. After including debt proceeds and repayments, CAPEX payments for energy-saving devices and ballast water treatment system installments, vessel sales proceeds, share buybacks, and the fourth quarter dividend payment, we arrived at a cash balance of $437 million at the end of the quarter.
Spiro: Slide five.
Spiro: Graphically illustrates the changes in the company's cash balance during the fourth quarter.
Spiro: We started the quarter.
Spiro: $441 million in cash.
Spiro: We generated positive cash flow from operating activities of 49 million.
Spiro: After including debt proceeds and repayments capex payments for energy saving devices and ballast water treatment system installments vessel sales proceeds share buybacks in the fourth quarter dividend payment. We arrived at a cash balance of $437 million at the end of the quarter.
Nicos Rescos: I will now pass the floor to our COO, Nicos Rescos, for an update on Engelbach integration and our operational performance. Thank you, Christopher. Slide 6 provides an update on the Eagle integration and synergy. We will continue to realize savings this quarter on the Operating Expenses Front, have a complete and consolidation of ship management practices across the Exegol vessels and offices with the company's headquarters, further reflecting our low general administrative expenses. Importantly, we expect to complete the phase-out of third-party crew managers by Q3 this year, replacing this critical function with our in-house crewing platform and hence realizing further cost optimization.
Spiro: I will now pass the floor to our CEO Nikos <unk> for an update on angle back integration into our operational performance.
Nikos: Thank you for yourself.
Spiro: Slide six provides an update on the eagle integration and synergies.
Spiro: We continue to realize savings this quarter on the operating expenses front, having completed consolidation of ship management practices across the X eco vessels and in offices with the company's headquarters further reflected in our low job administrating expenses.
Spiro: Importantly, we expect to complete the phase out of third party crew managers by Q3. This year, replacing these critical function with our in house coding platform. That's realizing further cost optimization.
Nicos Rescos: On completion of the last remaining crew changes, our dedicated crewing pool will comprise of more than 5,000 C-52s. For Q1, operating expenses and G&A savings for the Eagle fleet stand close to $2,140 per vessel per day. In addition, due to our scale in relations with the shipyards and service providers, we have reduced significantly the dry dock costs of the former Eagle Fleet, a saving of $8.6 million for the quarter. Interest expense savings have accumulated thanks to the refinancing of the former EGLE debt, which took place during the second quarter of 2024. Almost 40 million of cumulative cost synergies have been achieved since closing on the Ingo bulk transaction in April 2021.
Spiro: On completion of the last remaining crew changes are dedicated clean pool was comprised of more than 5000 seafarers.
Spiro: For Q1 operating expense and G&A savings for the Eagle fleet stand close to 2000 and $140 per vessel per day.
Spiro: In addition, due to our scale and relationships with the shipyards and service providers, we have reduced significantly the dry dock costs of the former eco fleet, a saving of $8 6 million for the quarter.
Spiro: Interest expense savings have accumulated thanks to the refinancing of the former Eagle debt, which took place during the second quarter of 2024.
Spiro: Almost $40 million of cumulative cost synergies have been achieved since closing on the Eagle bulk transaction in April 2024, our cost synergies for Q1.
Nicos Rescos: Cost synergies for Q1 stand at $18.4 million.
Spiro: Stand at $18 4 million.
Nicos Rescos: Please turn to slide 7, where we provide an operational update. Operating expense for Q1 2025 stands at $4,898. Net cash-in expenses were $1,319 per vessel per day for the same period.
Spiro: Please turn to slide seven where we provide an operational update.
Spiro: Operating expense for Q1 2025 stands at $4898.
Spiro: Okay.
Net cash G&A expenses were 1319 per vessel per day for the same period.
Nicos Rescos: In addition, we continue to raise at the top among our listed peers in terms of ridership safety. Slide date provides a fleet update and some guidance around our future dry dock and the relevant total off-high date. On the bottom of the page we provide our expected dry dock expense schedule, which for the remaining of 2025 is estimated at $47 million for the dry docking of 38 vessels. In total, we expect to have approximately 1210 of hard days for the same period. We have arranged to front-load dry docking first half of this year in order to take advantage of the dry bulk market seasonality during the second half of the year.
Spiro: In addition, we continued to right at the top amongst our listed peers in terms of Rideshare safety scores.
Spiro: Slide eight provides a fleet update and some guidance around our future dry dock and the relevant total off hire days.
Spiro: While the bulk of the pace, we provide our expected drydock expense schedule, which was the remaining of 2025 is estimated at 47 million for the dry docking of 38 vessels.
Spiro: In total we expect to have approximately 1210 off hire days for the same period.
We'll give a range to frontload drydocking first half this year in order to take advantage of the dry bulk market seasonality during the second half of the year.
Spiro: Yeah.
Nicos Rescos: On the top right of the page we have our CAPEX schedule illustrating our new building CAPEX and Vessel Energy Efficiency Upgrade Expansion. Based on our latest construction schedule, our five CAMSOMAX New Building Vessels, constructed at Kingdall Shipyard, are expected to be delivered during the first half of 2020. For these vessels, we have secured $130 million of debt financing against a new building installment.
Spiro: On the top right of the pace, we'll have our capex schedule illustrating our new building Capex investment in energy efficiency upgrade expenses.
Spiro: Based on our latest construction schedule. Our five comes from our new building vessels constructed Qingdao shipyards are expected to be delivered during the first half of 2026.
Spiro: For these vessels will have secured $150 million of debt financing I guess in your building installments.
Nicos Rescos: In line with IMO carbon reduction regulations, we will continue investing and upgrading our fleet with the latest operational technologies available, aimed in improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the Star Bulk fleet. Regarding our Energy Saving Technologies Retrofit Program, we have so far completed 42 installations, with another 21 planned for 2025.
Spiro: In London with IMO carbon reduction regulations, we will continue investing in upgrading our fleet with our latest operational technologies available.
Spiro: Aimed in improving our fuel consumption and reducing our environmental footprint further enhancing the commercial attractiveness of this cargo fleet.
Spiro: Regarding our energy saving technologies retrofit program, we have so far completed 42 installations with another 21 planned for 2025.
Nicos Rescos: Please turn to slide 9 for an update on our fleet. On the vessel sales front, we continue disposing non-ECO vessels opportunistically, reducing our average fleet age, and improving overall fleet efficiency. During Q1, we agreed to sell some of our less efficient supermax vessels, including Star Bittering, Star Omicron, and Strait of Tranquil. Furthermore, during the second quarter, we have further agreed to sell Star Puffin, Star Canary, and Star Patrel Supramax vessels at attractive levels. We expect to receive an aggregate net sale proceeds of $38.6 million in the second and third quarter of 2025. Following the rollover of the Eagle Buck existing charters and contracts, we now have a total of nine charter investments.
Spiro: Please turn to slide nine for an update on our fleet.
Spiro: On the vessel sales front, we continue disposing non eco vessels opportunistically, reducing our average fleet age and improving overall fleet efficiency.
During Q1, we agreed to sell some of our less efficient Super Max vessels, including sub return ceramic from Australia.
Spiro: Furthermore, do.
Spiro: During the second quarter without further agreed to sell start buffing Buchan, Larry and sharper trail Super IMAX vessels at attractive levels.
Spiro: We expect to receive an aggregate net sale proceeds of $38 6 million in the second and third quarter of 2025.
Spiro: Following the rollover of Eagle bulk existing chartering contracts, we now have a total of nine charter in vessels.
Nicos Rescos: Considering the aforementioned changes in our fleet mix, we operate one of the largest rival fleets amongst U.S. and European listed peers, with 150 vessels on a fully delivered basis, and with an average age of 11.9 years.
Spiro: Considering the aforementioned changes in our fleet mix, we operate one of the largest dry bulk fleet amongst U S and European listed peers with 150 vessels on a fully delivered basis and with an average age of 11 nine years.
Charis Plakantonaki: I will now pass the floor to our CSO, Charis Plakantonaki, for an update on recent global environmental regulation developments. Thank you, Nico. Please turn to slide 10, where we highlight the major developments on global environmental regulation.
Speaker Change: I will now pass the floor to our CSO hi, it's like a Nike for an update on the recent dropdown environmental regulation development.
Nike: Thank you Nicole.
Nike: Please turn to slide 10, we.
Nike: Highlight the major development on a global environmental regulations.
Charis Plakantonaki: The 83rd Session of the IMO's Marine Environment Protection Committee introduced a new Net Zero Framework, marking a major regulatory milestone toward achieving climate neutrality in international shipping by 2050. The new regulation introduces a greenhouse gas fuel intensity metric, which is the well-to-wake greenhouse gas emissions per unit of energy used on board the ship. This is similar to the few legal regulation which came into force in January 2020. Each ship is required to report its fuel intensity annually to the IMF. Two tiers of requirements are set on the annual fuel intensity for a ship, a base target and a more stringent direct compliance target which each ship is required to meet.
Nike: The 83rd session of the eye and most marine environment Protection Committee introduced a new net zero framework, marking a major regulatory milestone silhouette, that's even climate neutrality in international C think Pfizer and 50.
Nike: The new regulation introduces a greenhouse gas intensity med D, which is the way to wake greenhouse gas emissions per unit of energy board to ship.
Nike: This is similar to the Huguely Eregulation, which came into force in January 2025.
Nike: <unk> is required to report its full intensity annually to the I M O.
Nike: Two theories of requirements are set on the annual fuel intensity for receipt.
Nike: They started using the more stringent compliance targets with each seat is required to meet.
Charis Plakantonaki: A SIP which generates compliance surplus can transfer surplus units to SIPs with a compliance deficit or it can bank the units for later use within two subsequent calendar years. A ship with a compliance deficit can use surplus units from other ships or purchase remedial units from the IMO at $100 or $380 per ton CO2 equivalent deficit, depending on whether the ship's fuel intensity is between the base and direct target or above the base target. The profits from the new regulation will go into the IMO net zero fund to be set up and managed by the IMO.
Nike: A steep which generates compliant surplus can transfer surplus units two seats with a compliance deficits always can bank. The units for later use within two subsequent calendar years.
Nike: I see it with the compliance deficits can you surplus units from either seats or persist remedial units from the I M O, it's $100 or $380 per ton seal to equivalent deficit, depending on whether the ships shouldn't entity is between the base and their targets.
Nike: The base target.
Nike: The proceeds from the new regulation will go into the eye ammonia zero fund to be set up in minutes by the I am all.
Charis Plakantonaki: Part of the revenues are intended to be circulated directly back to the industry as a reward for using near zero fuels or energy sources which are near zero.
Nike: Part of that rather use our intend them to be circulated directly back to the industry as a reward for using near zero skus or energy sources, which are near zero.
Charis Plakantonaki: This new framework is set for adoption in October 2025, subject to final approval, with the first reporting period starting on 1st January 2020.
Nike: This new framework he said for adoption in October 25 subject to final approval with the.
Nike: First reporting period, starting on first January 2028.
Charis Plakantonaki: Star Bulk remains focused on researching and adopting optimal strategies to ensure timely and efficient compliance with the new global regulations.
Nike: Star bulk remains focused on researching and adopting optimal strategies to ensure timely and efficient compliance with the new global regulations.
Petros Pappas: I will now pass the floor to our CEO, Petros Pappas, for a market update and disclosing remarks. Thank you, Haris. Please turn to slide 11 for a brief update of supply. During the first four months of 2025, a total of 12.2 million dead weight was delivered and 1.1 million dead weight was sent to demolition for a net flip growth of 11.1 million dead weight or 2.9% year on year. The new building order book stands at a modest 10.3% of the existing fleet, with new contracts during Q1 falling to an 8-year low of 2.8 million deadweight, limited CPF capacity availability up to second half 2027, high sea building costs, and uncertainty over future green propulsion have kept new orders under control.
Speaker Change: I will now pass the floor to our CEO Petros Pappas for a market update and his closing remarks.
Nike: Thank you harriss.
Speaker Change: Please turn to slide 11 for a brief update of supply.
Speaker Change: During the first four months of 2025 and total of $12 2 million deadweight was delivered and one 1 million deadweight was sent to demolition for a net fleet growth of 11 1 million deadweight or 2.9% year on year.
Speaker Change: The new building order book stands at a modest 10, 3% of the existing fleet with new context during Q1 falling to an eight year low of 2.8 million deadweight.
Speaker Change: Limited shipyard capacity availability up to second half 'twenty 'twenty seven.
Speaker Change: Shipbuilding costs and uncertainty over future Green propulsion have kept new orders under control.
Petros Pappas: At the same time, the fleet is aging and by the end of 2027, approximately 50% of the fleet will be over 15 years old. Moreover, the increasing number of vessels undergoing the 3rd Special Survey is estimated to reduce effective capacity by approximately 0.5% per annum between 2025 and 2027. The average steaming speed of the fleet corrected to a new record low of 10.8 knots in February, driven by soft freight rates. Inflated Bunker Costs and Environmental Regulations Although speeds have rebounded slightly on the back of improved earnings and lower oil prices, they remain below last year's levels.
Speaker Change: At the same time the fleet is aging and by the end of 2027, approximately 50% of the fleet will be over 15 years old.
Speaker Change: Moreover, the increasing number of vessels undergoing the third special survey is estimated to reduce effective capacity by approximately 5% per annum between 2025 and 2027.
Speaker Change: The average steaming speed of the fleet corrected to a new record low standpoint notes in February driven by solid trade rates inflated bunker costs and environmental regulations.
Speaker Change: Although speeds have rebounded slightly on the back of improved earnings and lower oil prices. They remain below last year's levels.
Petros Pappas: In the medium term, new regulations on carbon emissions introduced by the IMO can be expected to continue to incentivize slow steaming and moderate effective supply. Finally, global port congestion fully normalized in the second half of 2024 after a two-year decline that inflated effective supply by about 6%. In Q1 2025, loading port congestion surged due to weather disruptions, while congestion at Chinese discharge ports fell to historic lows, driven by a sharp drop in import volume. For the remainder of 2025 and 2026, we expect congestion to have a neutral or slightly positive impact on the supply-demand balance and to follow seasonal trends.
Speaker Change: In the medium term new regulations on carbon emissions will display the I M. O can be expected to continue did 75 slow steaming and moderate effective supply.
Speaker Change: Finally, global Port congestion fully normalized in the second half of 'twenty 'twenty four after two year decline that inflated the effective supply by about 6%.
Speaker Change: In Q1, 'twenty 'twenty five loading port congestion shares due to weather disruptions while congestion in China is just started sports fell to historic lows driven by a sharp drop in import volumes.
For the remainder of 2025 and 26, we expect congestion to have a neutral.
Speaker Change: Or slightly positive impact on the supply demand balance and to follow seasonal trends.
Petros Pappas: Let us now turn to slide 12 for a brief update of demand. According to Clarkson's, after two years of strong demand expansion, total dry bulk trade is projected to contract during 2025 by 1.2% in tons and 0.4% in ton miles.
Speaker Change: Well it doesn't now turn to slide 12 for a brief update of demand.
According to Clarksons after two years of strong demand the expansion total dry bulk trade is projected to contract during 2025 by one 2% in tons and 0.4% in ton miles.
Petros Pappas: President Trump's aggressive tariff negotiations and policy shifts. since taking office have raised uncertainty in traditional forecasting models. Following Liberation Day, international agencies lowered their projections for global GBT growth and trade. The IMF revised its 2025 global economic growth forecast to 2.8%, down from 3.3% in January, with the U.S. forecast reduced to 1.8%, from 2.7%. and China to 4% from 4.6%.
Speaker Change: President Trump's aggressive nickel.
Speaker Change: Negotiations some policy shifts since taking office have raised answered the same traditional forecasting models following liberation day international agencies lowered their projections for global GDP growth and trade.
Speaker Change: The IMF revised its 2025 global economic growth forecast to 2.8% that's down from three three in January with the U S forecast is reduced to one 8% from one 7% and China two 4% from four 6% however upward revisions.
Petros Pappas: However, upward revisions could now be expected after the initial trade agreement between the US and China took place last weekend in Geneva. During the first quarter of 2025, total dry bulk volumes were at year-on-year, supported by strong bauxite and minor bulk shipments, while iron ore, coal, and grains volumes combined declined by 3.5% year-on-year. Suez Canal crossings remained at 50% of pre-footy attacks levels, and Red Sea passages will probably be slow to restart. China's GDP exceeded expectations during Q1 and grew 5.4%, fueled by more aggressive stimulus measures as of September 2024 and an increase in retail sales, industrial production and exports.
Speaker Change: That would be expected after the rate agreement between the U S and China took place last weekend in Geneva.
Speaker Change: During the first quarter to 75 total dry bulk volume.
Speaker Change: Year on year supported by strong bauxite in minor bulk shipments, while iron ore coal and grain volumes combined.
Speaker Change: <unk> by three 5% year on year Suez Canal crossings remained at 50% of <unk> attacks.
Speaker Change: And Richie passengers will probably be slow to restart.
Speaker Change: Yeah.
Speaker Change: China's GDP exceeded expectations during Q1 and grew five 4% fueled by more aggressive stimulus measures as of September 'twenty 'twenty four.
Speaker Change: And then increase in retail sales industrial production and exports.
Petros Pappas: Chinese dry bulk imports contracted by 8.3% year-on-year during the first quarter driven by elevated inventories and rising domestic production of iron ore, coal, and grains throughout 2024.
Speaker Change: These dry bulk imports contracted by eight 3% year on year during the first quarter driven by elevated inventories and rising domestic production of iron ore coal and grains throughout 'twenty 'twenty four choices for sure.
Petros Pappas: Can you hear us? Operator Yes, we can hear you. On the other hand, dry bulk imports from the rest of the world expanded by 4.5% year-on-year as lower commodity prices, easing monetary policy and preemptive stockpiling in anticipation of U.S. tariffs helped stimulate demand for raw materials.
Speaker Change: Can you hear us okay.
Speaker Change: Hey, Dara.
Speaker Change: Yes, we can hear you.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: On the other hand, drybulk imports from the rest of the world expanded by four 5% year on year.
Speaker Change: <unk> is lower commodity prices easing monetary policy in France give stockpiling in anticipation of U S sites help stimulate demand for raw materials.
Petros Pappas: Growth has been driven mainly by developing Southeast Asian nations and the Middle East, while European imports have steadily increased since mid-2024.
Speaker Change: Growth has been driven mainly by developing southeast Asian Nations and the middle East while European imports have steadily increased since mid 2024.
Petros Pappas: Iron ore trade is projected to contract by 1.3% in tons and by 0.6% in ton miles during 2025. During Q1, China's steel production increased by 1.1% year-on-year, supported by strong exports and lower input costs. During the rest of the year, government efforts to reduce steel overcapacity and growing protectionist measures by major steel importers may curb steel output. However, iron ore imports are expected to gain support, as Chinese port stockpiles have declined in recent months and domestic iron ore production fell by 11.7% in Q1 2025. Iron ore tonnemiles are projected to receive further support by late 2025, as new high-grade Atlantic iron ore mines begin operations, progressively replacing lower-quality Chinese domestic production and imports.
Speaker Change: Iron ore trade is projected to contract by one 3% in dumps and by 0.6% in ton miles during 2025.
Speaker Change: During Q1, China steel production increased by one 1% year on year supported by strong exports and lower input costs.
Speaker Change: The rest of the year government efforts to reduce steel overcapacity in growing protectionist measures by major still importers make care still out however, iron ore imports are expected to again supports as Chinese sports stockpiles have declined in recent months and domestic iron ore production.
Speaker Change: <unk> fell by 11, 7% in Q1 'twenty to 'twenty five.
Speaker Change: Iron ore ton miles are projected to receive further supported by late went to 25 is the new high grade Atlantic Iron ore mines to begin operations.
Speaker Change: Collectively, replacing lower quality Chinese domestic production and imports.
Petros Pappas: Coal trade is projected to contract by 3.2% in tons and by 3.6% in ton-miles during 2021. Falling record high imports in 2024, Chinese and Indian coal imports sharply contracted in early 2025, driven by robust domestic coal production and year-on-year contraction of thermal electricity generation. Rising Renewable Energy Production in China and Elevated Coal Inventories Heighten Downside Risks for Imports, While Falling Coal Prices Over the Past Six Months Have Further Compressed Profit Margins for International Coal Miners. Nevertheless, strong demand from Southeast Asian economies is expected to provide some support on cold trade over the next year.
Speaker Change: Coal trade is projected to contract by three 2% in tons and by three 6% in ton miles during 2025.
Following the record high imports in 2020 for Chinese and Indian coal imports sharply contracted in early 2025, driven by robust domestic coal production in a year on year contraction of thermal electricity generation right.
Speaker Change: Rising your renewable energy production in China, and elevated coal inventories heightened downside risks for imports, while falling coal prices over the past six months have further compressed profit margins for international coal miners.
Speaker Change: Nevertheless, strong demand from southeast Asian economies is expected to provide some support on close rates over the next year.
Speaker Change: Okay.
Petros Pappas: Grain trade is projected to contract by 2.1% in tons but expand by 0.6% in ton-miles during 2025. During Q1, total grain exports declined by 5.6% year-on-year, driven by a nearly 50% drop in Chinese imports. The Brazilian soybean season was delayed, affecting long-haul shipments early in the year, but exports surged over the past two months, driven by increased Chinese buying to build inventories ahead of the U.S. export season. Having said that, the recent U.S.-China trade agreement may boost U.S. exports to China during Q4, mirroring the trade deal during President Trump's first term. But the 2025 grain trade outlook will also depend on the strength of China's harbors.
Speaker Change: Grain trade is projected to contract by two 1% in tons spuds expense by 0.6% installed during 2025.
Speaker Change: During Q1, but they'll grain exports declined by five 6% year on year, driven by a nearly 50% drop in Chinese imports.
Speaker Change: The Brazilian soybean season was delayed affecting long haul shipments early in the year, but exports over the past two months driven by increased Chinese buying to build inventories ahead of the U S export season.
Speaker Change: I understand that the recent U S China trade agreement.
Speaker Change: Boost U S exports to China during Q4, mirroring the trade deal during President Trump's first step, but the 20 to 25, great. Great outlook will also depend on the strength of China's harvests.
Petros Pappas: Minor but trade is projected to expand by 0.4% in tons and by 0.8% in ton miles during 2025. Minor but trade may encounter challenges from heightened trade tensions due to its close ties to global GDP. But recent progress in U.S.-China trade relations could drive upward revisions to full-year projections. Oxide exports from West Africa continued their strong performance and expanded by 31% during Q1, generating strong tonne miles for the Cape Size fleet.
Speaker Change: Minor bulk trade is projected to expand by 0.4% function by 058 percent in ton miles during 2025 minor.
Speaker Change: Minor bulk trade demand countless challenges from heightened trade tensions due to its close ties to global GDP, but the recent progress in U S. China trade relations could drive upwards revisions to our full year projections.
Speaker Change: Okay exports from West Africa continued their strong performance and expanded by 31% during Q1 generating strong ton miles for the Capesize fleet.
Petros Pappas: As a final comment, we expect a volatile market in 2025, as the U.S. administration clearly states a wish to reset the trade landscape. We nevertheless remain cautiously optimistic about the medium-term outlook for the dry bulk market, given the favorable supply picture, stricter IMO environmental regulation. and accumulation of stimulus measures by the Chinese government and positive signals from the US-China tariffs negotiations.
Speaker Change: As a final comment we expect the volatile market in 2025 as the U S administration, clearly states at least through the trade landscape whenever it. Nevertheless, we remain cautiously optimistic about the medium term outlook for the dry bulk market given the favorable.
Speaker Change: Supply picture stricter I am all environmental regulations.
Speaker Change: And makes the relation of stimulus measures by the Chinese government and positive signals from the U S. China tariffs negotiation.
Petros Pappas: In a period of increased geopolitical uncertainty, we remain focused on actively managing our diverse scrubber-fitted fleet to take advantage of emerging market opportunities and create value for our shareholders.
Speaker Change: In the periods of increased geopolitical uncertainty, we remain focused on actively managing our diverse scrubber fitted fleet to take advantage of emerging market opportunities and create value for our shareholders.
Petros Pappas: Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have. Thank you.
Speaker Change: Without taking any more real time I will now pass the floor over to the operator to answer.
Speaker Change: Any questions you may have.
Speaker Change: Thank you. The floor is now opened for questions. If he would like to ask a question. Please press star one on your telephone keypad at this time.
Operator: The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. Again, that's star 1 to register a question at this time.
Speaker Change: [noise] formation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star Keys again Thats Star One to register a question at this time.
Omar Nokta: Today's first question is coming from Omar Nokta of Jeffreys, please go ahead. Thanks Operator, hi Petros, hi guys, thanks for the update. Hi, yeah, you were mentioning just at the end of your comments, you know, expecting a bit of a volatile year just given everything that's going on. It does feel when we look at dry bulk that it seems to be in somewhat of a holding pattern in terms of where rates are, you know, rates aren't terrible, they're also not exciting, we're just sort of in this interesting period. We've also seen asset values hold up seemingly quite well, especially, you know, as confirmed by your latest sales.
Host: Today's first question is coming from Omar <unk> of Jefferies. Please go ahead.
Speaker Change: Thank you. Thanks, operator, Hi, Petros Hi, guys. Thanks for the update.
Host: Yeah, Hi.
Mark: Well Mark as you mentioned.
Mark: Yeah, you were mentioning just at the end of your comments expecting a bit of a volatile year just given everything that's going on it does feel when we look at drybulk that it seems to be somewhat of a holding pattern in terms of where rates are the rates.
The rates aren't terrible.
Mark: They're also not exciting we're just sort of in this interesting period.
Mark: We've also seen asset values hold up seemingly quite well, especially as confirmed by your latest sales.
Omar Nokta: I just want to get a sense from you, what do you think is ahead here for this market?
Mark: Want to get a sense from you what do you think is ahead here for this market.
Omar Nokta: I know it's probably a big picture question, but just in general, when we think of where asset values are and then where the underlying rates are, something has to give at some point, any kind of, any feeling you have for how this market starts to progress here in the coming, you know, quarter? Thank you, Omar.
Mark: I know, it's probably a big picture question, but just in general when we think of where asset values are and where the underlying rates are.
Mark: Nothing has to give at some point any kind of.
Mark: And you're feeling you have for how this market starts to progress here in the coming quarters.
Mark: Okay.
Speaker Change: Thank you Omar let.
Petros Pappas: Let me quote somebody first. Niels Bohr, the guy, the father of the atomic energy. said that prediction is very difficult, especially about the future. And that tells you that it's equal to 4C. Anyway, we have views over here, so I'll talk for a few minutes about that. There are pros and cons in this market. The pros are mostly geopolitical and macro. The cons are more micro, I would say. Let me let me start. On the pros, we have the bauxite from West Africa and the iron ore from West Africa and Brazil that are coming in the future, especially due to the environmental regulations, China and others will need to...
Mark: Let me quote somebody first.
Mark: Needless bore the guy the father of the atomic energy.
Mark: Said that predictions.
Mark: <unk> is very difficult, especially about the future.
Mark: Yes.
Mark: I can tell you that it got to foresee anyway, we have used over here. So I'll talk for a few minutes about that.
Mark: There are pros and cons in these markets.
Mark: The pros are mostly geopolitical and macro.
Mark: The cons are more.
Mike: Mike or I would say, let me let me start.
Speaker Change: Oh on the pause we have the the bauxite from West Africa, and the iron ore from West Africa, and Brazil that are coming in the future.
Speaker Change: Especially during our due to the environmental regulations.
Speaker Change: China, and others will need higher content, I iron and the iron ore and that will actually incentivize imports.
Petros Pappas: higher content iron in the iron ore, and that will actually incentivize importing iron ore from longer distances. So that is going to be a positive, especially when the new ore, iron ore, cement do comes, for example, in starting to export their first tons towards the end of the year. So that's one thing. The environmental regulations are going to help in general and that is a very important thing and it will start to bite as years go by.
Speaker Change: Importing iron.
Speaker Change: Iron ore from longer distances, so that is going to be a positive.
Speaker Change: Especially when the new or iron ore.
Speaker Change: Simandou comps for example in a in a in a starting to export.
Speaker Change: Export their first.
Speaker Change: So I'll start with the end of the year.
Speaker Change: So that's one thing.
Speaker Change: The environmental regulations are going to help engender.
Speaker Change: And that is a very important thing and it will start to bite as time as years go by.
Petros Pappas: Then we have the potential of. If the war in Ukraine stops, we have a potential reconstruction over there, which will also lead to congestion. And that could also happen in Gaza and Syria, if that war stops. And if there is an agreement in Iran, that would also incentivize trade. So these are potentialities that I think will come in the next months or very few years, and it will be very positive. Then we have China boosting their economy because of what's happening and... and the way that the U.S. President has treated them. And that's going to be a positive as well, because on the con, you...
Speaker Change: Then we have the potential of.
If the war Ukraine stops, we have a potential reconstruction over there, which will launch flip congestion and that could also happen in Gaza and Syria.
Speaker Change: Is that the war stops.
Speaker Change: And if.
Speaker Change: If there is an agreement in Iran that would also exemplifies trade. So these are <unk>.
Speaker Change: In Seattle is that I think will come in the next months or very few years and it would be very positive.
Speaker Change: Then we have China boosting the economy because of what's happening and why.
Speaker Change: And the way that the U S based and there's three of them and that's going to be a positive as well because on the corners you.
Petros Pappas: China is actually going to be reducing imports the way we see it. Now, oil prices, if oil prices go down, this is a good macro effect in the sense that it will help GDPs of various countries. And if the dollar goes down, as is being forecasted... That is also a positive for trade because it reduces the cost of raw materials, it reduces the cost of freight in local currencies, and it also reduces the vessel prices in local currencies. So they would be willing potentially to pay more dollars for them. So these are generally the positives.
Speaker Change: China is actually.
Speaker Change: I'm going to beat it using the imports are the way we seats.
Speaker Change: Now oil prices if oil prices go down this is a good macro macro effect in the sense that it will help the gdp's of Oh various countries.
Speaker Change: And if the dollar goes down as is being forecasted.
Speaker Change: That is also a positive for for trades, because it reduces the cost of raw materials. It reduces the cost of freight in local currencies and it also reduces the vessel prices in local currency. So they would be willing potentially to pay more for them. So.
Speaker Change: This is definitely the positives.
Petros Pappas: The negatives, one big negative is China itself on coal, they will be importing less coal going forward, but this is going to be a story in general about coal. I think coal will be traded less every year. However, I think that the environmental regulations effect will counter the coal negative future. Also, China is trying to increase their own grain production, and they're engaging in GM crops. So that could be a negative as well. And if it is true that they will cut their crude steel production, then iron ore will reduce as well. So China is a potential negative.
Speaker Change: The negatives one big negative as China itself.
Speaker Change: On coal they will be importing less calls going forward, but this is going to be a story in general about coal I think all will be traded less every year.
Speaker Change: However, I think that the environmental regulations effect will counter recall negative our future.
Speaker Change: Also China is trying to increase their own with grain production and they're engaging in a G. M crops, so that could be a negative as well.
Speaker Change: And if it is true that they will cut their crude steel production than iron ore will reduce as well so China is and potential negative then let's see opening he is going to be a negative unfortunately bulk carriers.
Petros Pappas: Then Red Sea opening is going to be a negative. Fortunately, bulk carriers have been less affected than other types of vessels, but that's going to be a negative anyway. Then we see that there is not a lot of scrapping and the order book is usually about 3-3.5% per annum and scrapping is 0.5% so we actually need 3% we have 3% increase in vessels, we need 3% increase in demand to negate that. And as a final major point, if oil prices go down... As I said, it's a positive in the sense that it's good for the economies of the world, but the micro effect would be that vessels would speed up.
Speaker Change: Have been less affected than the other types of vessels, but that's going to be a negative anyway.
Speaker Change: Then we see that there's not a lot of scrapping and the order book is usually about three three and a 5% per annum and scrapping of 0.5%, So we actually need 3%.
Speaker Change: We have 3% increases in vessels, we we need 3% increase in demand to negate that.
Speaker Change: And.
Speaker Change: The final major points.
Speaker Change:
Speaker Change: If oil prices go down.
Speaker Change: As I said, it's a positive in the sense that it's good for them for the economies in the world but.
Speaker Change: Oh, the micra, the micra favorable it'd be that vessel would speed up so having said pros and cons.
Petros Pappas: So having said pros and cons... My view is that we're probably... going to be seeing a similar market with not too many ups and downs following seasonal patterns. meaning that second half should be stronger than the first half, but without amazing results. But if anything like Ukraine reconstruction or Iran opening and more, they know that happens, then I think that this is going to be an extra bonus for the market. So, summing up, I think we will be seeing a moderate year with upward potential in case the world starts to stop. Thanks. Thanks, Petros. Very obviously, incredibly detailed.
Speaker Change: My view is that we're probably <unk>.
Speaker Change: Going to be seeing a similar market.
Speaker Change: With not too many ups and downs following seasonal patterns, meaning.
Speaker Change: Meaning that second half should be stronger than the first half, but without amazing Ah results, but if anything you'd like.
Reconstruction or or Iran, opening and more fading off if that happens then I think that this is going to be an extra bonus for the market. So.
Speaker Change: Summing up I think we will be seeing a moderate year with potential upward potential in case the worldstar stops.
Speaker Change: Thanks, Thanks, Pat Trustful, very obviously incredibly detailed and I had a couple of follow ups that you answered and those are in your response I appreciate that so I'll pass it over that's it for me. Thank you.
Omar Nokta: And I had a couple of follow-ups that you answered in your response. I appreciate that. So I'll pass it over. That's it for me. Thank you.
Speaker Change: Thank you.
Chris Robertson: Thank you. The next question is coming from Chris Robertson of Deutsche Bank. Please go ahead.
Chris Robertson: The next question is coming from Chris Robertson of Deutsche Bank. Please go ahead. Hey, good morning, guys. Thank you for taking my questions. I just wanted to dial in here on the recent asset sales on how to think about timing for delivery and incoming cash over the next couple quarters. And should we be thinking about, you know, those aggregate sales proceeds as basically being kind of 50-50? Or are some of the older assets I'm kind of more weighted in the near term. And if you could talk about kind of the cadence of incoming cash.
Chris Robertson: Hey, good morning, guys. Thank you for taking my questions.
Speaker Change: Wanted to dial in here on the recent asset sales on how to think about our timing for delivery and incoming cash over the next couple of quarters and should we be thinking about you know the aggregate sales proceeds as basically being kind of 50 50 or are some of the older assets.
Speaker Change: I'm kind of more weighted in the near term and if you could talk about kind of the cadence of income and cash.
Speaker Change: Yeah.
Nicos Rescos: Chris, all vessels that we have announced, the three vessels that we have announced that have been committed to be sold, are basically being delivered to their buyers in the second and early third quarter of this year. Therefore, the total proceeds that we have announced of $38.5 million US dollars are basically fully received at delivery of each vessel during this quarter and the beginning of next. got it. Okay, thank you.
Speaker Change: Greece, all vessels that we have announced the three vessels that we have announced that have been committed to be sold are basically being delivered to their buyers in the second and early third quarter of this year. Therefore, the total proceeds that we have now.
Speaker Change: <unk> of $38 5 million U S dollars are basically a fully received the delivery of feeds very soon during this quarter and the beginning of next.
Speaker Change: Got it okay. Thank you and could you just as a follow up to that just how are you guys thinking about the use of those sales proceeds here or are you reserving that cost on the balance sheet for potential reinvestment opportunities or are you looking at kind of further share repurchases here as you know shares continued to trade at a meaningful discount.
Nicos Rescos: And could you just as a follow up to that? How are you guys thinking about the use of the sales proceeds here? Are you reserving that cash on the balance sheet for potential reinvestment opportunities? Or are you looking at kind of further share repurchases here as you know, shares continue to trade at a meaningful discount? Chris, as long as our shares trade at a meaningful discount to NAV, today's levels essentially, the opportunity to buy back shares at a significant discount to net asset value by using proceeds from vessels sold at net asset value essentially locks a very nice arbitrage for us.
Speaker Change: Yeah.
Speaker Change: I agree as long as our shares trade at a meaningful discount to any V. Two.
Speaker Change: Today's levels essentially the opportunity to buy back shares.
Speaker Change: At a significant discount to net asset value by using proceeds from vessels sold at net asset value essentially locks in a very nice arbitrage for us. Therefore, we think that our first priority is essentially on a on buybacks.
Nicos Rescos: Therefore, we think that first priority is essentially on buyback. Got it. That's very clear. Thank you for that.
Speaker Change: Got it that's very clear thank you for that I'll turn it over.
Operator: I'll turn it over. Thank you, Chris. Thank you. Again, that's star one.
Speaker Change: Thank you Kris.
Speaker Change: Thank you again Thats Star one if you have a question. The next question is coming from Doug Smith of Everest. Please go ahead.
Doug Smith: If you have a question, the next question is coming from Doug Smith of Everest. Please go ahead. Thank you. As you show in your slides, the order book over the last five years has been relatively controlled, but this demolition has been negligible. And as you mentioned, about half a percent a year. So as a result, the net fleet growth over the last five years has significantly exceeded the underlying growth in ton miles.
Speaker Change: Thank you as you are and you show in your slides the order book over the last five years has been been relatively controlled.
Speaker Change: But there's demolition has been negligible.
Speaker Change: And as I think as you mentioned about 5% a year. So as a result, the net fleet.
Speaker Change: Growth over the last five years has significantly exceeded.
Speaker Change: The underlying growth in ton miles.
Petros Pappas: What is your view of What demolition is likely to do over the next few years? And what can you attribute as the causality of the low demolition rate over the last five? Yeah, well... To be able to cover that gap of 3%, I think that the environmental regulations will play a big role. I think that the exports from West Africa and the increased exports from Brazil in the future of high-quality iron will also be able to increase ton-miles. You know, increasing ton-miles is much more important than increasing tons. I think these things will definitely cover part of that 3%.
Speaker Change: What is your view.
Speaker Change: What that and listen it is likely to do over the next few years and ER.
Speaker Change: What can you attribute is the causality of the.
Speaker Change: A low demolition rate over the last five years.
Speaker Change: Okay.
Speaker Change: Yeah well.
Speaker Change: To be able to to cover that gap of 3% I think that via environmental regulations will play a bigger role.
Speaker Change: I think that the exports from West Africa.
Speaker Change: And the increased exports from Brazil in the future of high quality iron ore will also be able to increase ton miles you know increasing ton miles is much more important than increasing tons.
Speaker Change: I think these things will will are definitely.
Speaker Change: Cover forest over that 3%.
Petros Pappas: Then, if we have any reconstruction in the places that I mentioned earlier, that will create congestion and that's going to be important as well.
Speaker Change: And then if if we have any of the construction in the places that I mentioned earlier.
Speaker Change: That will create congestion and that's going to be important as well.
Speaker Change:
Petros Pappas: Now, you will see that in the last quarter, the order book was just 2.9 million tons dead weight. And I think this could be a result of not being able to foresee what is going to happen. Lately, the geopolitical regulations have been affecting us a lot. We do not know where this is going. So people actually do not order. Plus, the vessels are pretty expensive. So if that trend continues, it is possible that the order book will actually drop. I think it has dropped already to a certain degree, and I believe that this will continue.
Speaker Change: Now you will see that our in the last quarter.
Speaker Change: The order book was just two 9 million tons deadweight.
Speaker Change: And I think this could be a result of.
Speaker Change: Not being able to foresee what is going to happen.
Speaker Change: Lately.
Speaker Change: The geopolitical.
Speaker Change:
Speaker Change: The relations have been have been affecting us a lot and we do not know where this is going so people actually do not are.
Speaker Change: The north door, there plus the vessels are pretty expensive. So if that trend continues and then it is possible that the.
Speaker Change: The order book will actually drop I think it is booked already.
Speaker Change: To a certain degree and I believe that this will continue and if the market.
Petros Pappas: And if the market remains medium, I think people will just not order. Plus, let's not forget that we do not know which will be the engines of the future, which is going to be the fuel of the future. So all that creates a very hazy future that discourages ordering. and that is actually going to be good for the market.
Speaker Change: It means medium I think people will just not order.
Speaker Change: Let's not forget that we do not know which.
Speaker Change: Which will be the engines of the future, which will which is going to be the fuel of the future. So all of that creates a very hazy future that discourage this ordering.
Speaker Change: And that is actually going to be good for the market.
Speaker Change: Yeah.
Doug Smith: Yes, as you sell a number of your older ships, can you provide any color on How the buyer is going to use them, you know, these ships do not seem to be leaving the fleet. You know, as ships age and get over 20 years. What's their use? you know, why are they not being retired? Does your, you know, customers have any Are they willing to pay a premium for a more efficient or modern ship, or is there no? Premium that you can recognize in the market. Well, first of all, for as long as the vessels are not making a loss, people do not scrap.
Speaker Change: Yeah. So she is you sell a number of your older ships.
Speaker Change: He can provide any color on.
Speaker Change: How the buyer is going to use them you know these shifts do not seem to be leaving.
Speaker Change: Leaving the fleet.
Speaker Change: As ships, aged and get over 20 years.
Speaker Change: What what's their use.
Speaker Change: You don't why are they not being retired.
Speaker Change: Does your customers.
Speaker Change: Have any.
Speaker Change: Are they willing to pay a premium for a more efficient or.
Speaker Change: Modern ship.
Speaker Change: Or is there no.
Speaker Change: Premium that you can recognize in the market.
Speaker Change: Well first of all it for as long as the vessels are not making a loss.
Speaker Change: Do not scrap.
Petros Pappas: That's one thing. Secondly, the buyers are Chinese. now I'm not sure what they're saying. What we are seeing is that the return on investment on these vessels is not good enough for us. And you know, we have very low operating expenses and we have scrubbers. We actually have probably among the lowest operating expenses. And still, the return is not good enough. And therefore, we get rid of them. Now, what they are thinking and what kind of IRR they can survive with, it's I suppose their own matter, unless if they know something about China that we don't.
Speaker Change: That's one thing secondly, the buyers are Chinese.
Speaker Change: No.
Speaker Change: I'm not I'm not sure what they're seeing.
Speaker Change: What we are seeing is that the return on investment on these vessels is not good enough for us and you know we have very low operating expenses and web scrubbers, we actually have probably among the lowest operating expenses.
Speaker Change: And still return is not good enough.
Speaker Change: And therefore, we get rid of them and now there's what they are thinking and what kind.
Speaker Change: Kind of IRR of vacant survive with its I suppose their own matter unless if they know something about.
Speaker Change: Now that we're done.
Speaker Change: Yeah.
Petros Pappas: Do you see the environmental regulations as being a catalyst that's going to actually cause ships to be scrapped, or is that unlikely to happen for the foreseeable future? It will definitely slow down speed. It will take longer time to install ESDs in shipyards and to keep the vessels in better condition so that they consume less and to clean their hull more often so that they don't burn more fuel, which will be a punishment for high consumers. Because now I think there may be a few, a number of older, heavier consuming Chinese vessels that may not be as competitive as others.
Speaker Change: Do you see the environmental regulations as.
Speaker Change: It has been a catalyst that's going to actually cause ships to be scrapped.
Speaker Change: Or is that.
Speaker Change: Unlikely to happen for the foreseeable future.
Speaker Change: Yeah.
Speaker Change: It will it will definitely slowed down speeds.
Speaker Change: It will take longer time to install is days in AR.
Speaker Change: And shipyards and to keep the vessels in a better condition, so that they consume less and to clean the house more often.
Speaker Change: So that they.
Speaker Change: They don't burn more fuel oils woods.
Speaker Change: B a punishment for for high consumers now I think there may be a few in number of alder.
Speaker Change: Heavier consumer consuming.
Speaker Change: Chinese vessels that may not be as competitive as others and there is also those will be that there wont be wont be making any profit. So I think that there will be a percentage that is caused because of these reasons and perhaps we won't get two vessels that are.
Doug Smith: And the result for those will be that they won't be making any profit. So I think that there will be a percentage that is crap because of these reasons. And perhaps we won't get to vessels that we won't get to keep vessels over 20 years of age at some point. But I think the immediate effect is going to be on speed and delays in dry docks. And then scrapping will will follow. Okay, thank you. Thank you Doug. Thank you.
Speaker Change: We won't get to keep vessels over 20 years of age at some point and I think the immediate effect is going to be on the speed then.
Speaker Change: And delays in Drydocks, and then scrapping will will follow.
Speaker Change: Okay. Thank you.
Doug: Thank you Doug.
Speaker Change: Thank you at this time I'd like to turn the floor back over to management for any additional or closing comments.
Operator: At this time, I'd like to turn the floor back over to management for any additional or closing comments. No further comments operator, thank you very much.
Doug: Yeah.
Doug: No further comments operator, thank you very much.
Doug: Okay.
Operator: Ladies and gentlemen, thank you for your participation.
Doug: Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines have log off the webcast at this time and enjoy the rest of your day.
Operator: This concludes today's event. You may disconnect your lines or lock off the webcast at this time and enjoy the rest of your day.
Doug: Okay.
Doug: [music].