Diana Shipping Inc (DSX) 2020 Q4 法說會逐字稿

Greetings, and welcome to the Diana Shipping Inc. 2020 Fourth Quarter Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Edward Nebb, Investor Relations. Thank you. You may begin.

Thank you, Darryl, and thanks to all of you for joining us for the Diana Shipping Inc. fourth quarter and year-end conference call. The members of the management team who are with us today include Mr. Simeon Palios, Chairman and Chief Executive Officer; Ms. Semiramis Paliou, Deputy Chief Executive Officer and Chief Operating Officer; Mr. Anastasios Margaronis, President; Mr. Ioannis Zafirakis, Interim Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary; and Ms. Maria Dede, Chief Accounting Officer.

Before management begins their remarks, let me just briefly remind you of the safe harbor notice that certain statements during the call, which are not historical fact are forward-looking statements under the provisions of the Private Securities Litigation Reform Act, and such forward-looking statements are based on assumptions, expectations projections and beliefs as to future events that may or may not prove to be accurate. For a description of the risks, uncertainties and other factors that may cause future results to differ from the forward-looking statements, please refer to the company's filings with the Securities and Exchange Commission.

And now with that out of the way, it is my pleasure to turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer.

Thank you, Ed. Good morning, and thank you for joining us today to discuss the results of Diana Shipping Inc. for the fourth quarter and full year 2020.

The story of the past year, as we know all too well, was one of uncertainty and economic dislocation caused by COVID-19 pandemic. Now as we look forward towards 2021, we can hope that the increasing availability of vaccines will help an eventual return to more stable, less volatile market conditions. In any event, we will continue to pursue well-established strategies to maintain the company's financial strength, manage our fleet in a prudent manner and focus on enhancing shareholders value.

Before I summarize our financial results, I wish to comment on today's announcement regarding several senior management appointments approved by our Board of Directors. These actions will be effective as of March 1, 2021 and are intended to provide for an ordinarily succession and to ensure the continued sound strategy management of the company. The leadership appointments are as follows: Ms. Semiramis Paliou has been appointed Chief Executive Officer, having previously served as Chief Operating Officer and Deputy Chief Executive Officer. My position as Chairman of the Board of Directors remains unchanged. I will serve in that capacity as nonexecutive Chairman when the Chief Executive Officer role is assumed by Ms. Paliou. Mr. Anastasios Margaronis, who will continue to serve in his current capacity as President and the Director of the company, positions he has held since 2005. Mr. Ioannis Zafirakis has been appointed Chief Financial Officer on a permanent basis. He has served in that role on an interim basis since February 2020. He also will remain the Chief Strategy Officer, Treasurer and Secretary of the company. Mr. Eleftherios Papatrifon has joined the company and has been appointed to the position of Chief Operating Officer. Mr. Papatrifon is highly qualified, having most recently served as the Chief Executive Officer, Co-Founder and Director of Quintana Shipping Limited and previously as the Chief Financial Officer and a Director of Excel Maritime Carriers Limited. I'm deeply grateful for the opportunity to serve as the company's Chairman and CEO since it's establishment, and I'm delighted to continue as nonexecutive Chairman going forward. The orderly, seamless succession approved by our Board will ensure that we have both continuity of senior leadership and new perspectives as we maintain the strategic vision and sound management of the company for the future.

Our incoming CEO, Mrs. Semiramis Paliou has strong experience in the shipping industry and has served our company well in a range of responsibilities for more than a decade. I have a great confidence in the strength and capability of the entire Diana Shipping Inc., team and their ability to lead the company into the future.

With respect to our financial results, Diana Shipping reported a net loss of USD 7.4 million and net loss attributed to common stockholders of USD 8.9 million for the fourth quarter of 2020, including a USD 1.9 million impairment loss. This compares to a net loss of USD 14 million and net loss attributed to common stockholders of USD 15.4 million reported in the fourth quarter of 2019, including a USD 6.5 million impairment loss and USD 3.3 million loss on sale of assets.

For the full year 2020, the net loss was USD 134.2 million and net loss attributed to common stockholders was USD 140 million, including a USD 104.4 million impairment loss and USD 1.1 million loss on sale of vessels. This compares to a net loss of USD 10.5 million and net loss attributed to common stockholders of USD 16.3 million for 2019, including a USD 14 million impairment loss and USD 6.2 million loss on sale of vessels.

Time charter revenues were USD 42.7 million for the fourth quarter of 2020 compared to USD 51.5 million for the same quarter in 2019. This was mainly due to the decrease in ownership days, resulting from the sale of 2 vessels in 2020, and also due to decreased average time charter rates that the company achieved for each vessel during the quarter. Time charter revenues were USD 169.7 million for the full year 2020 compared with USD 220.7 million for 2019.

Turning to the balance sheet. Cash, cash equivalents and restricted cash totaled USD 82.9 million at December 31, 2020. Long-term debt was USD 420.3 million and has decreased by USD 54.6 million since the end of 2019, reflecting our ongoing commitment to return value to shareholders. In December 2020, the company announced a self tender offer to purchase up to 6 million shares of its outstanding common stock. The tender offer was completed in February 2021 at a price of USD 2.5 per share.

In connection with our activity management of the company's fleet in December 2020, we announced an agreement to sell the 2001-built vessel of Oceanis with delivery to the buyers latest by April 16, 2021 for a sale price of USD 5.75 million before commissions. In total, including the oceanic -- Oceanis, we sold 5 vessels during 2020. We will continue to maintain a fleet of modern, efficient vessels to meet the needs of the dry bulk marketplace.

As we move forward in 2021, we will continue to navigate the prevailing challenging conditions, while remaining sharply focused of preserving and building shareholders' value. With that, I will now turn the call over to our President, Stasi Margaronis, for a perspective on industry conditions. He will then be followed by our Interim Chief Financial Officer, Chief Strategy Officer, Treasurer and Secretary, Ioannis Zafirakis, who will provide a more detailed financial overview.

Thank you.

Thank you, Simeon. And welcome to all the participants to this latest quarterly conference call of Diana Shipping Inc.

During the last quarter of 2020 and the first few weeks of 2021, the market has certainly given all participants reasons to pay careful attention to current developments and make some exciting predictions about the short and medium-term developments. The Baltic Exchange Index started the year at 1,374 and closed the last Friday, February 19, at 1,698. The Baltic Cape Index moved down from 2,008 to 1,715. And the Baltic Panamax Index started the year at 1,364 and has moved up to 2,332 as of last Friday.

Turning to macroeconomic developments. According to figures released recently by the IMF, global GDP growth is expected to rise by 5.5% this year and by a further 4.2% in 2022. This follows the shrinking of global GDP by an estimated 3.5% in 2020.

We sincerely hope these optimistic forecast come to pass, as a pandemic is continuing to affect economic activity this year and will not allow our businesses to work at their pre-pandemic pace for some quarters to come.

Chinese GDP is expected to grow by 8.1% this year and by 5.6% in 2022. These growth forecasts follow growth of just 2.3% in 2020. In the United States, GDP after shrinking by an estimated 3.4% last year, is expected to grow by 5.1% this year and by a further 2.5% in 2022. Europe, whose economic activity dropped by about 4.6% last year, is estimated to grow by 3.9% in 2021 and by a further 3.4% in 2022.

Let's have a quick look at newbuilding deliveries during the last year. According to banchero costa, 480 bulk carrier units, so 48.6 million deadweight tons were delivered last year. This total included 25 VLOCs, 84 Capes, both totaling about 25 million deadweight. 24 Post-Panamaxes and 128 Panamaxes, both these categories totaling about 12.65 million deadweight. These figures are to be compared with the newbuilding order book we mentioned later in this discussion.

Look at the order book now. As far as new building contracts signed in 2020 are concerned, Clarksons report that they totaled about 13.5 million deadweight tons, which was down nearly 58% compared to the equivalent figure of 2019. Clarksons also reported that in December 2020, there were 38.8 million tons of Panamaxes and Post-Panamaxes on order, representing about 6% of the trading fleet. Of these, 9 million deadweight are scheduled for delivery in 2021 and 4 million deadweight in 2022.

At the same time, there were 23.9 million deadweight of Capes, including VLOCs on order, which was the equivalent of about 6.6% of the current trading fleet. Of these, 15.9 million deadweight are expected to be delivered in 2021 and 7.2 million in 2022. The above statistics, coupled with the overall bulk carrier order book, which is not higher than 6%, bode well for the supply trends of the industry, at least for the next 12 to 18 months. The above-mentioned order book to existing fleet ratio has dropped to the lowest level since 2002. One of the reasons why newbuilding orders are low is not only the uncertainty of future demand, this has always been there, but the uncertainty of the appropriate fuel for the large marine engines of the future.

We agree with Howe Robinson that the dilemma surrounding the future fuel for ship propulsion wharf the comparatively simple to scrap or not to scrap decisions of a couple of years ago. Shipping's green agenda has been firmly established since the IMO decided to include shipping in its target to reduce CO2 emissions by 40% by 2030. The fact that relatively few of the currently proposed solutions appear suitable and/or economic for retrofits makes -- might create the newbuilding boom across the board sometime this decade. Furthermore, the combination of mandated regulations and feasible technologies, when these eventually become available, could have a severe effect on the resale prices, particularly of young, traditionally powered vessels. According to Howe Robinson, whatever green fuels eventually emerge as winners, they will most likely be more expensive than existing ones. Consequently, fuel-efficient ships, including those that have wind assisted technologies, are likely to enjoy significant freight premium.

There is broad agreement that LNG is probably the only fuel currently available in sufficient quantities to achieve emission cuts in the near-term of about 20% to 25%. This, coupled with the problem of methane residues, which needs to be overcome, makes LNG just a bridge towards future compliant propulsion fuels. As a chairman of one bulk carrier owner remarked, "Do you actually build the bridge or wait to see what is on the other side of this bridge?" These few words encapsulated the dilemma facing ship owners in ordering newbuilding vessels of any kind today. So until it is decided, if the green fuel of the future will be ammonia, biofuels, hydrogen, atomic batteries or something else, the decision to order on a large scale, expensive newbuilding units will be held back. This can only be good news for the shipping market as a whole in the medium term.

Let's look at dry bulk demand and supply now. According to Clarksons, the total dry bulk trade remained effectively stagnant during 2020 at 29.344 million ton miles. Expressed in tons of cargo, seaborne dry bulk trade shrank by an estimated 2.1% in 2020. The forecast is for volumes to rise by 3.7% in 2021 and reach 30.435 billion tons by the end of the year. For 2022, the forecast is for a further 2.6% increase. The projected ton mile demand increase for this year, must be set against the projected 2.6% net increase in supply of tonnage in 2021, which should support some fundamental rebalancing and possibly lead rates higher from their present levels. Such a low level of net fleet increase has not been seen according to Howe Robinson for about 15 years. Given the fact that this small increase follows a period of relative balance between supply and demand in the sector, this cannot but bring some good news on earnings and asset values.

For 2022, dry bulk tonnage is projected to increase by only 1%. If this is indeed realized, the market should be supported even further in the medium-term as well, considering the estimated demand increase mentioned above of 2.6%.

Let's look at steel now. According to Howe Robinson, based on figures issued by the Chinese steel association, China's steel demand will increase slightly in 2021 compared to 2020 supported by stable macroeconomic policies. Chinese steel production rose to a record 1.05 billion tons in 2020 as the economy is gradually reopening after the coronavirus-induced lockdowns boosted demand. To comply with the government's desire to reduce carbon emissions, it is likely that China will increase imports of primary steel products, especially billets. The latter is a raw slab of steel that needs to be processed further. The imports of such billets increased 500% in 2020 and are likely to increase even further in 2021. Such a trend, if indeed, prevails will reduce somewhat the amount of iron ore and to a certain degree of coking coal that China will need for its steel mills going forward.

During last year, imports of steel products into China increased by 64.4%, while exports fell by 16.6%. This trend is expected to prevail this year as well mainly due to the effects of the pandemic.

Iron ore. Now according to Clarksons, iron ore imports worldwide are expected to grow this year by 3% and reach 1.545 billion tons. For 2022, the forecast is for a further 1% increase. For this year, Chinese imports are expected to keep growing as they did last year despite potentially slower steel production growth and the partial reversal of the shift away from scrap use seen last year. Iron ore demand by other countries around the world is anticipated according to Clarksons to grow by about 11% this year after posting significant drops in 2020.

For example, European imports of iron ore in 2020, that's excluding the United Kingdom, were down 25.2% year-on-year at 70.2 million tons.

As for coking coal, Clarksons report that the coking coal trade is estimated to have declined by 9% to around 247 million tons last year as the COVID-19 pandemic had a major impact on steel mill rates of utilization in several key regions. Total coal imports by the 27 EU members dropped 32.3% in 2020 compared to 2019 and totaled a mere 68.7 million tons according to Refinitiv vessel tracking data. This year, coking coal trade is expected to increase by 6% compared to last year and by a further 5% in 2022. U.S. and Canadian export volumes are expected to increase by around 12% this year, always according to Clarksons.

On thermal coal now. Clarksons report a global seaborne steam coal trade is estimated to have declined by 10% to around 920 million tons last year, primarily due to the effects of the COVID-19 pandemic. While this trade remains under pressure, a partial rebound of about 4% is projected for 2021 as the world overcomes the worst impact of the pandemic. Chinese steam coal imports are expected to fall by 3% this year, so volumes are highly sensitive to government policies, and major uncertainty remains. Projected increase of imports by countries like India, Indonesia and the Southeast Asian region will make up for the lower imports by China. Worth noting that China did not import any coal from Australia in December 2020 and the ban on coal imports from that country remains in force.

Those lost cargoes are now sourced from places like Russia, South Africa and Indonesia. Small volumes are transported also overland from Mongolia.

Take a look at the grain trades now. According to Clarksons, the global seaborne grain trade is initially projected to grow by around 2% in the 2021 grain season, following a 6% increase seen in the previous grain season. This slowdown will, according to Clarksons, be connected to a much slower projected growth in the soybean trade after last year's strong 10% increase. This performance was underpinned by U.S. soybean exports, which according to Refinitiv vessel tracking data increased by 36% year-on-year at 61.4 million tons. During 2020, China imported a total of 94.7 million tons of soybeans, which was 33% higher than in 2019.

For the 2021-'22 grain season, overall volumes are expected to grow by a further 3% and reach 532 million tons.

A quick look at the minor bulk trades. The minor bulk trades, which have gradually grown and have come to represent about 2 billion tons of cargo shipped per year worldwide, are estimated to grow by 4% this year and by another 3% in 2022. Several cargoes falling under this broad category, such as pet coke, bauxite, cement, copper concentrates, soy meal and others are shipped more and more in Panamax vessels.

A look at scrapping now. According to Howe Robinson, 124 bulk carrier vessels of 15.9 million deadweight were sold for scrap in 2020. Last year saw about 11.3 million tons of Capes being sold for scrap and only 900,000 deadweight worth of Panamaxes. For 2021, an estimated 5.6 million deadweight worth of Capes are expected to head for the scrapyards and about 1.9 million deadweight worth of Panamaxes. These numbers will obviously fluctuate depending on the state of the freight market this year.

Looking briefly at the age profile of the large bulk carrier fleet, Clarksons reported that at the beginning of the year about 21% of the total Panamax fleet were over 15 years old, while only 9% of the Capesize fleet fell into that age category. Only 2% of Capes in the water are over 20 years old.

So let's try and form an outlook for the industry after all the statistics that we have been talking about. This -- that the statistics seem to indicate that after a long wait, the stars affecting the fortunes of the dry bulk trades are finally becoming aligned. The statistics and the future estimates reported above, even if they materialize by only 75% or so, cannot help but bring about a long-awaited recovery in the dry bulk earnings. The duration of such a good market will depend on, among other things, firstly, the ship owner sentiment about the market; secondly, the availability or lack thereof of credit; thirdly, the pricing of newbuildings; and fourthly, charterer's perception about the future trends in this industry.

Therefore, we mostly agree with the view expressed by Commodore Research that dry bulk prospects remain positive at least for the near term. China's coal import prospects, for example, remain encouraging, while coal stockpiled at China's 6 major coastal power plants have been on a free fall and recently stood at just 12 million tons. These stockpiles are enough to meet only 15 days of demand, which is an extremely low level as electricity production this winter has been setting record highs. All other commodities are also expected to move in increased volumes while supply appears to be well under control. These features of the market, coupled with lack of serious imbalances creating surplus standards during the last couple of years, make us as a company reasonably optimistic about the future of our industry.

As has been the case up to now, the Diana management team will use market developments to strengthen even further its balance sheet, lower the average age of our fleet initially, initially at least, through vessel sales, which we have been doing for the last few quarters. Eventually, we will also be reinstating a long-awaited dividend to our shareholders.

Our business strategy will continue to be conservative, and at the same time, opportunistic. And our track record is there to prove the beneficial result of such policies implemented consistently and with full transparency.

I'd like now to pass the call to our CFO, Ioannis Zafirakis, who will provide us with the financial highlights of Q4 2020 and annual results for the whole year. Thank you.

Thank you, Stasi Staci. Good morning to everyone. I'm pleased to be discussing today with you the Diana's operational results for the quarter and year ended December 31, 2020.

During that quarter, we recorded a net loss attributed to our common stockholders of $8.9 million, that's $0.10 per share. But of course, that includes an impairment of $1.9 million impairment loss.

In 2020, as you are aware, we sold 2 vessels that decrease the ownership days for the quarter to 3,680 compared to 3,915 the same quarter in 2019. You are probably aware that we -- as of December 31, we have also agreed to sell 3 more vessels, of which the 2 were delivered to their new owners in January 2021. And there is one still remaining to -- which is held for sale. The less ownership days, together with the deteriorated market conditions during that quarter, led to lower revenues of -- totaling of -- at $42.7 million compared to $51.5 million in the fourth quarter of 2019.

We -- there was a decrease in the voyage expenses that were $3 million compared to $4.5 million for the same quarter in 2019. And this is mainly because of decreased commissions and decreased loss from the bankers. The decrease in revenues that we talked earlier resulted in decrease in the daily time charter equivalent rate, which was $10,940 Compared to $12,264 for the same quarter of 2019.

We had less of our days in that quarter and the utilization improved at 99.6% compared to 96.9% the same quarter last year. There was a decrease to the operating expenses, which was $22.4 million compared to $23.4 million last year. And of course, this is a result of the sale of the vessels.

Although the total number of operating expenses was lower than the previous year's quarter, daily operating expenses were more or less the same. They stood at $6,089 per day compared to $5,969 for the same quarter of 2019. We have achieved -- the reason is because there was an increase in the crew expenses insurances and operating expenses that were partly offset by the decreased spares and repairs.

The general and administrative expenses decreased to $7 million compared to $7.8 million for the same quarter last year. And this is because of decreased payroll costs, including compensation costs on restricted stocks. The good thing is that we had interest and finance costs continuing to decrease in this quarter due to the decreased interest rate and decreased average debt, which -- it was at $4.6 million in that quarter compared to $6.7 million in Q4 2019. And towards that, of course, it helped the repurchase of the bond of the $8 million worth of bonds.

For the year-end December 31, 2020, the net loss attributed to common stockholders attributed to $140 million or $1.62 per share. And again, this includes a big impairment loss of $104.4 million and $1.1 million loss on the sale of a vessel. As you can understand, the time charter revenues decreased also to $169.7 million compared to $220.7 million for the same period in the previous year. The reasons have been already explained.

And similarly, the daily time charter equivalent rate decreased to 10.9-- $10,910 per day compared to to $12,796 last year. The fleet utilization for the year decreased to 97.9% compared to 98.6% in 2019. And that was related to COVID-19 issues and increased dry docking days.

The vessel operating expenses amounted to $85.8 million compared to $9.6 million for 2019. The decrease in operating expenses was due to the decrease in ownership days and was offset by increased expenses in insurance, spares, repairs and operations and taxes. Daily operating expenses in 2020 were $5,750 compared to $5,510 for the year 2019.

There was an increase for the year in the general and administrative expenses, which was at $32.8 million compared to $28.6 million for 2019. But this is an excellent ordinary increase because of the accelerated vesting of the restricted shares of Board members, which was due to the company's restructuring in 2020. And it's complete separation from Performance Shipping Inc.

Interest and finance costs, they decreased to $21.5 million compared to $29.4 million last year, as we explained earlier.

We would like to thank you for your attention. And we will, of course, be pleased to respond to your questions. And now I will turn the call to the operator, who will instruct you as to the procedure for asking questions.

(Operator Instructions)

Our first question has come from the line of Randy Giveans with Jefferies.

Yes. Congrats to all on the promotions and new positions. All right. So yes, you've done a great job, obviously, with the asset sales, the tender offers, chartering strategy, your stock's more than doubled, right, in the last few months. So congrats on all that. Now that your share price is closer to NAV, if not above NAV, and the market outlook is fairly attractive. What are your plans for your fleet in terms of ongoing sales, maybe some acquisitions or further share repurchases?

Now you correctly pointed out, this is Ioannis. Randy, you correctly pointed out that it is very important to see where we are in the cycle and where we are based on our NAV. So you should not be expecting to pay any dividend if we are trading below NAV. And if the market conditions are not such that we can make sure that this dividend is going to be sustainable for the short to medium term.

Now as regards further sales of vessels. Of course, if we can combine it with buying back some of our shares for the discount to NAV, we will consider if or if we can combine it with buying back some of our expensive debt. Buying new vessels at the moment is the last option that we have. But I want to stress out again that we have managed, even in the last 15 years to always have various options ahead of us to act accordingly. And this is, I think, the main characteristic of Diana Shipping Inc., that we have always a lot of options on how to react. Listening to other companies, they don't have as many options. So be certain that we will choose whatever is most appropriate for our shareholders.

Sure. Okay. And then in terms of the -- just the market, looking at Panamaxes now currently still outperforming Capesizes, obviously, the forward curve is showing that inflection coming soon where Capesizes outperformed Panamaxes. Do you have a preference for one size of vessels over the other? And then also, can you describe maybe the situation and how that will drive that inflection of Capesizes outperforming Panas in the coming months?

As we have said many times in the past in the medium to long term, we do not see -- people should be expecting that the one type of vessel should go along with the other. And more or less, everything is included in the price of the asset. So the fact that you have for the short-term a kind of inefficiency or the one type outperforming the other is something that we have seen in the past. And we don't consider that to be as a new norm or something that is going to continue.

Certainly, correcting your assumption. But I think what has happened in the Panamax sector has to do more with the sentiment as regard to the Chinese New Year, you know that sentiment is very important. And if we overdo it with that and if we are afraid, for example, what is going to happen in the Chinese New Year regarding (inaudible) demand, then you have the results of the things that you saw happening 2 weeks ago or a week ago in the Panamax sector. So fundamentals are going to prevail. And at the end of the day, I think you were going to see a universal move of rates upwards, as Stasi said earlier, in the short to medium term.

Having said that, we think that we are very well invested to that respect and to take advantage of this happening, and we will not try and to make some more by doing moves today, as we speak, i.e., buying vessels and so on and so forth. We think we are very well invested. And if the market moves upwards, we are going to be there and take advantage of that. We have a lot of assets to fix in the months to come. And we are there to take advantage of the situation.

Our next questions come from the line of Omar Nokta with Clarksons Platou Securities.

And also congratulations on the management succession, and also Eleftherios joining as well. The -- I wanted to maybe just touch on kind of the last topic from Randy. It's been obviously a long time coming, but it's notable to hear you speak fairly positively here on the outlook. I understand the -- at this point, you've got the fleet that you can fix and there's no rush right now to go out and buy assets. The -- in thinking about deploying the fleet, I know generally, you've -- or basically since your existence as far as I can remember, you don't do spot trading. Everything is generally on time charter. In the past, you've done -- you've tended to have 1-. 2- or 3-year time charters. But more recently, they've generally been around that 12-month range, I would say. Any changes do you see happening to how the fleet is deployed going forward from here? Do you expect to put more ships on longer term contract? Any color you can give on that would be great.

Okay. You have well noticed that we have kind of shortened the hedging period of ours. We still have a hedging period. Having said that, we cannot stay completely still and not try to take advantage of the short-term events. And therefore, this is why you see us having a lot of vessels opening during next quarter and the quarter to come and in the last quarter of 2020. So the only thing that I can say is that we have shortened the period of hedging, but at the moment, it's, I would say, close to a year, where in a better market is close to 2 years. And in a fantastic market, it's close to 3 years. And so yes, we have taken some steps towards the market moving up.

Having said that, we will not put all of our eggs in one basket, as you know. And this is the absolute maximum risk that we are willing to take at the moment, i.e., a year of hedging.

Okay. That's helpful. And then maybe just on that point, when it is time to deploy capital on vessels, in thinking about the larger ships, you operate both the Newcastlemaxes and the Capes. What would you prefer when it's time to spend money on a new larger vessel, especially with your strategy of sticking with time charters? Is there a clear preference in your discussions with customers on whether they prefer to put a Newcastlemax or a Cape on charter?

People are having preferences, but you are not paying the same price of each -- for each preference, Omar. And therefore, theoretically, in an efficient market, everything should be included in the price of the asset that you are buying. We are not talking here that someone has an inside information, and he knows that one type of vessel is better than the other, and the market has not taken care of that. So theoretically speaking, there should not be someone trying to -- someone should not try and explain why the one is better than the other because we are not paying the same price.

If we were to be asked what is our preference, we can say to you that we like the larger size of the vessels, not because we think that is a more profitable business but we think it's a more volatile business. And for our model and the way we try to create value for our shareholders, the bigger the vessel, the more favorable is, we think, for our model to create value.

Okay. That's pretty clear. And maybe just one final one, and I'll turn it over. Just a comment on the dividend. I joined the call a little late, but I heard Stasi's comments about bringing back the dividend. I just want to make sure I heard correctly. Do you -- have you officially decided to bring back the dividend? Or is that...

No, no, no. This is which we think -- he said maybe or is -- the time will come where we will introduce. We didn't say that we are going to -- we will introduce or we have taken a decision to that effect. As I said earlier, we have to see market conditions being such that the dividend is sustainable, and we have to see also the stock price being above NAV in order to introduce dividend because you know that if you are trading below NAV, the use of your money may be better to buy back the stock rather than pay a dividend.

Yes, if I can add to it. My words eventually. And of course, what we see here or we hope, is developing something that we saw several years ago coming up. In other words, the stock trading at a significant premium and earnings going up. The ingredient to be there for the situation that Ioannis described to develop and allow us to pay dividend, but we don't know when this will happen.

Eventually, [$40]. You remember, eventually.

Our next question is come from the line of Greg Lewis with BTIG.

I guess my first question is around on realizing that Diana is not directly impacted on the smaller vessels. But that being said, strength in the Supramax market finds a way to spill into the Panamax market and vice versa. So it's an interesting time in the market in that. It seems like the Supramax market is really driving the strength in rates as opposed to typically the Capes. Just kind of curious, what -- if you're seeing anything, how that's happening? Kind of any thoughts around that, that would be helpful.

I think Stasi was elaborate on his analysis, but I think the most important element to what you have seen recently, it had to do with the sentiment, Greg, and how people were thinking about the beginning of the year, I think most of them that are really careful and they rush to fixed vessels and the market was a bit better-than-expected as regards the demand. There were some seasonal issues with the demand. And therefore, the market was caught without a lot of vessels being available for charter. And this is how it happened, I think. At the end of the day, medium to long term, everything has to do with fundamentals. How many vessels we have in the water and what's the demand for carrying goods by sea.

Okay, great. And then just as I think about it, I mean, clearly, the -- based on your prepared remarks, we're looking at renewing our fleet. This is something that's been going on for a while now. I guess I'm just kind of curious, realizing that Diana is -- I don't know if you're an aggressive seller, but clearly, you have some older ships in the fleet you're thinking about selling into the market. What is the -- we can kind of see the state of the modern tonnage market. Has there been any pickups in the -- in interest in buying some of these older vessels in your fleet? Just kind of curious as we look out over the next 6 to 12 months just given the current upturn in rates. Has the phone been ringing a little bit more from potential buyers of some of those vessels?

That is 100% correct. The interest on buying our older tonnage is much higher than what it used to be 20 days ago or 30 days ago. People are reacting to the higher rates that they saw recently, and they have rushed to buy older tonnage. Where the older tonnage seems to be having the better return -- but I don't know about the risk reward ratio. Return for certainty.

Well, don't forget that the sale and purchase market is lagging the freight market or vice versa. You need a steady state for the sale and purchase market to come in line with the freight market. So unfortunately, the last 3 months, the market has been very volatile. We have not reached this steady state. Therefore, the values of the secondhand vessels have not come to a sort of line with the freight market.

Our next question is come from the line of Tucker Long with Stifel.

This is Tucker Long on for Ben Nolan. With the recent developments and strength that we've seen in the dry bulk space, has there been an increased appetite from the charters for longer duration contracts, effectively hedging out on their end?

Yes. But I don't think that this is an indicator. I know that people are trying to use that as an indicator on what the charterers are seeing in the market ahead. And this is why they may want to charter vessels for longer period today as we speak. But this is not entirely correct because you have the FFAs, where they dictate the number more or less of the -- such a charter rate of 2 years or 3 years. And this has always been the case. You don't have the charter expressing you saying I'm only wanting to fix a vessel for 2 years. They say to you, we can do 2 years, if you want, we can do 1 year. So although -- I think the question should be for the -- from the -- better ask the owners to see whether they have any interest because the rate that they're going to get is more or less known. I don't know, probably a confused view, but looking at what the charterers are asking, is not the right thing to do recently because charterers usually are there to accommodate any type of request as regards period at a different number.

Yes, that makes sense. So my second question, I know you guys mentioned you're not looking to buy ships right now. But in the event that, that changes, how do you guys think about your purchasing power to buy ships? Or I guess, effectively, how much dry powder would you guys have to acquired vessels?

I think it all depends on how comfortable we are feeling with the cash that we have aside. You can see that our cash position is very strong. The question is, how much we want to leave aside, and this is going to be influenced by what type of contracts and revenues we will have assumed. And at the same time, we have the unmortgaged vessels that if they are to be sold, they can buy more if we wish to do so, although we said that we are not interested. I think if we were another company with a different risk profile, our buying powder would have been around $200 million. So that's $400 million in new vessels, more or less.

(Operator Instructions)

There are no further questions at this time. I would like to hand the call back over to management for any closing comments.

Thank you, again, for your interest in and support of Diana Shipping Inc. We look forward to speaking with you in the coming year.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.