Weak demand rather than excessive growth of the dry bulk fleet continues to plague the sector, said Golden Ocean Group, as it reported a loss for both the second quarter and the first half of 2015.
According to the listed dry bulk shipping company in John Fredriksen’s business empire, the net loss in the second quarter amounted to USD35.5 million compared with a profit of USD6.3 million a year earlier. Revenue rose to USD49.3 million from USD20.6 million. The figures are not directly comparable as Golden Ocean merged with Knightsbridge Shipping in the course of the current year.
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In the first half of 2015, the loss amounted to USD110.9 million compared with a profit of USD17.0 million in the same period last year. However, the group booked a USD140.9 million impairment charge against its fleet in the first half. Revenue rose to USD67.4 million from USD40.7 million.
“The low utilisation of the dry bulk fleet in the first six months of the year has been due to demand issues rather than increased supply,” Golden Ocean said in a statement.
Deliveries of newbuildings in the period amounted to 110 Handysize vessels, 159 Handymaxes/Supramaxes, 88 Panamaxes/Kamsarmaxes, and 57 Capesize vessels.
“During the first half of 2015 less than 27 million dwt were delivered. Even though the delivery rate picked up slightly during the month of July, it is unlikely that the delivery ratio will exceed 65% of the official orderbook this year,” the company predicted.
Golden Ocean said that following two very weak quarters in the markets, the group will be moving on to the third quarter of 2015 with more optimism, in particular, for the Capesize segment.
“With a spot market close to USD20,000/day, it was questionable whether it was a structurally damaged market balance due to oversupply. Then a three step devaluation by the Chinese Central Bank and a very nervous Chinese stock market removed all signs of optimism over a fortnight,” Golden Ocean noted.
“With falling commodity prices and growing uncertainty in general, activity among dry bulk charterers is low at present. In the short term, this could be painful for owners of dry bulk assets, but in a longer-term perspective the supply side should repair itself faster than previously anticipated,” the company concluded, adding that its strong balance sheet gives it interesting opportunities and various alternatives are evaluated continuously.