Star Bulk Carriers Corp (SBLK) 2014 Q1 法說會逐字稿

Thank you for standing by ladies and gentlemen and welcome to the Star Bulk conference call on the first-quarter 2014 financial results. We have with us Mr. Spyros Capralos, the President and Chief Executive Officer, and Mr. Simos Spyrou, Chief Financial Officer of the Company.

At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session.

(Operator Instructions).

I must advise you this conference is being recorded today, Thursday, May 29 the year 2014. We now pass the floor to one of your speakers today, Mr. Spyros Capralos. Please go ahead, sir.

Thank you, operator. I am Spyros Capralos, President and Chief Executive Officer of Star Bulk Carriers.

And I would like to welcome you to the Star Bulk carriers first-quarter 2014 financial results conference call. Along with me today to discuss our financial results is our CFO, Mr. Simos Spyrou.

Before we begin I kindly ask you to take a moment to read the safe Harbor statement on slide number 2 of our presentation. Since you are all quick readers now that we are done with slide number 2, I would like to summarize our business strategy as presented on slide number 4.

Star Bulk is executing an aggressive fleet expansion and renewal strategy with 11 fuel-efficient new buildings from top-class yards as well as opportunistic acquisitions of premium secondhand tonnage. Having invested at essentially the bottom of the cycle we secured compelling delivery slots in 2015 and early 2016 now worth $80 million above their contract costs.

Our commercial strategy allows us to maintain spot market exposure taking advantage in the future of the market's recovery and of the savings from our fuel-efficient new buildings. We have diversified the composition of our fleet by weighing more on larger vessels that will benefit mostly from a growth market recovery due to the economies of scale they offer on a freight-per-ton basis and the increase in long-haul shipments.

On a fully deployed basis we will own 12 Capesizes in Newcastlemax vessels out of a fleet of 28 vessels in total. Furthermore, we have leveraged our sponsors vast experience in shipping involving acquiring, operating and successfully disposing vessels along various stages of the shipping cycle. The benefits of the above spend across various areas from access to first-tier shipyards to long-term relationships with charters and brokers.

Finally, despite being in a growth mode we remain committed to the cornerstone of our goals that is maximizing total returns for our shareholders. As our fleet expands and the dry bulk market recovery is established we will evaluate where favorably the potential return of capital to shareholders in a manner consistent with our overall business strategy, cash flows and liquidity positions.

Please turn out to slide number 5 for a brief review of our recent key corporate developments during this quarter. On a corporate level as we had previously announced we acquired 33% of the share capital of Interchart Shipping in exchange for $200,000 in cash and 22,598 shares of Star Bulk.

Interchart serves us as our charting broker, so we simultaneously enter the service agreement whereby chartering services will be provided for a fixed scalable fee initially set at $685,000 per annum versus the previous variable compensation model of 1.25% on our gross freight revenues. This acquisition provides us with operational control as well as significant cost savings in the future.

On the operational side we have taken delivery of our two last vessels acquired, Star Vega and Star Sirius, in February and March respectively. Upon their delivery both vessels assumed their long-term charter with Glocal Maritime at $15,000 per day until mid-2016. One of our Supramax vessels, Star Epsilon, underwent its periodic dry docking from the middle of March until early April.

On the financing side during the first quarter of 2014 we have drawn a total of $74 million related to two previously announced facilities with HSH and Deutsche Bank so as to finance the four secondhand vessels acquired. Finally, we have entered into a swap arrangement so as to mitigate our floating interest-rate exposure in the future.

Specifically, we have hedged forward 50% of the new debt facility of HSH, starting September 30, for a period of four years at a fixed rate of 1.765% per annum. We view this as necessary given the anticipated US interest-rate tightening. Currently, approximately 30% of our interest-rate exposure in 2015 is hedged at an average fixed rate of 1.7%.

Overall, as you can see we have been continuing implementation of our stated strategy with 28 vessel fleet on a fully deployed basis. And by consolidating our resources and optimizing our capital structure and financing costs we are clearly well positioned to benefit from the attractive fundamentals of the dry bulk market.

And now I'll ask Mr. Simos Spyrou, our CFO, to give you an update on the financial results. Please go ahead, Simos.

Thank you, Spyros. Let us now to slide number 7 of the presentation for a preview of our first quarter of 2014 financial highlights in comparison to last year's respective quarter.

In the three months ended March 31, 2014, net revenues amounted to $19.3 million, 11% increase versus respective figures during the first quarter of 2013. Net revenues represent our total revenues adjusted for non-cash items less volume expenses.

The reason we refer to our net revenues is because this figure nets out any difference in the number of voyage charters we performed in each period and therefore is directly comparable to other periods. The increase in our net revenues is attributed mainly to the addition of the Post-Panamax vessel in our fleet as well as the increase in the management fee income earned.

Adjusted EBITDA for the first quarter of 2014 was $7.8 million, decreased by 10.7% versus last year's respected figure. The decrease is attributed to the higher dry docking expenses which amounted to $700,000 this quarter versus $200,000 during the first quarter of 2013 whereby no vessel was dry docked. Furthermore, prior-year's quarterly figure also incorporated an amount of $700,000 of net operational gain which was related to claim settlement payments which is not recurring this quarter.

Overall, during the first quarter of 2014 the Company had a net loss of $900,000 compared to a net profit of $1.2 million in the first quarter of 2013. Excluding non-cash items our adjusted net income for the first quarter amounted to $1.7 million gain compared to an adjusted net income of $2.8 million in the first quarter of 2013.

Our time charter equivalent rate during this quarter was $14,343 per day per vessel essentially in line with the $14,316 per day (technical difficulties) to the predelivery expenses for the full secondhand vessel acquired, the average daily operating expenses in the first quarter of 2014 were $5,342 per vessel versus $5,531 per vessel during the same quarter last year representing a 3.4% decrease year on year. The adjusted net income of $1.7 million represents an adjusted EPS of $0.06 per share versus an adjusted net income of $0.51 per share during the respective period in 2013. However, I would like to note that this substantial decrease in the earnings per share is mostly attributed to the increase in the weighted average number of shares outstanding from 5.4 million to 28.8 million during the first quarter of 2014 so as to account for the two equity offerings conducted in the second half of 2013.

Please turn now to slide 8 to discuss our balance sheet profile. Currently, our total debt stands at $255.1 million, our total cash position at $57.8 million and our net debt at $197.3 million.

Furthermore, the market value of our fleet in the water stands currently at $420.5 million. In addition, our 11 new buildings currently worth $562.8 million, $80 million or 16% above their converted price bringing our fully delivered fleet value close to $1 billion. We have paid $79.8 million in the form of advance payments for the 11 vessels on order so far.

Taking all the above into account we calculate our NAV per share on a charter free basis at $13 per share, a level at which our current stock price implies a 15% discount. Going forward as you can see from the bottom left graph our principal repayment so far this year stands at $9.2 million while our remaining scheduled principal repayment for 2014 and 2015 stand at $13.2 million and $34 million respectively.

As it is evident from the graph in the right bottom assuming 60% debt financing we essentially have no remaining equity CapEx payment for 2014 while for 2015 and 2016 the respective obligation stands at $77.2 million and $15.7 million respectively. So overall, we have a smooth debt repayment profile over the next three years while our remaining CapEx obligation are tail heavy providing a substantial flexibility in managing our cash flows. I would like now to pass the floor back to Spyros so as to provide you with an update with our fleet strategic operational and commercial developments.

Thank you, Simos. Slide 10 gives you a brief review of our fleet profile.

We currently own 17 dry bulk vessels. 5 of them are Capesizes, 2 Post-Panamaxes, 2 Ultramaxes and 8 Supramaxes with a total deadweight capacity of 1.6 million deadweight tons and an average age of about nine years.

We have in addition a new building program consisting of 11 fuel-efficient eco-friendly vessels under order in first-class shipyards consisting of five new Castlemaxes, two Capesizes and four Ultramaxes with delivery spanning between 2015 and early 2016. Upon full delivery of our new buildings we will own a total of 28 vessels from 17 vessels today.

The fleet is managed internally which provides full efficiency and transparency to our shareholders. Aside from the management of our own fleet we also provide ship management services today to 14 third-party vessels for a daily fee of $750 per day. On the bottom left graph you can see that upon completion of our new building program we will have grown our total fleet under management to more than 8 million deadweight tons representing a 35% compounded annual rate of growth on deadweight basis from 2009.

Please turn to slide 11 to discuss commercial performance. Since 2009 both Capesize and Supramax vessels have outperformed the market. Specifically our Capesize fleet has outperformed the Baltic Capesize Index by 61% on average during this period.

During Q1 2014 our Capesize vessels earned an average daily TCE of $23,108, 41% higher than the $16,370 per day that the BCI had averaged over the same period. The performance was positively affected due to the decision we took at the beginning of the year to reposition Star Polaris and Star Borealis to Brazil.

For the latter I would like to note that we have arranged a voyage charter of 12 straight days of $27.75 per ton, right before the market reversed to today's levels of about $18 to $19 per ton. As you can appreciate, this difference implies a $1.7 million in additional revenues for this voyage.

Our Supramax fleet has also been outperforming the BSI Index by 25% on average since 2009. During Q1 2014, our Supramax vessels earned an average daily TCE of $10,597, 4% higher than the $10,207 per day that the BSI had averaged over the same period. This performance includes the results of the two Ultramax vessels that joined our fleet in late 2013.

Please turn to slide 12 for an overview of our fleet employment and our charter counterparties. Currently, we have secured 57% of our available days in 2014, 18% in 2015 and 6% in 2016. Specifically, our time charter coverage in the Capesizes is 59% for 2014 and 19% for 2015 at an average gross daily rate of $24,019 -- I would've liked it to have been $100 more -- while our Supramax coverage stands at 48,000 -- 48% for 2014 at the gross daily rate of $12,736.

On Panamax we are fully covered for the next two years while we have secured 52% of our available dates in 2016 at the previously announced gross charter rate of $15,000 per day. Overall, as of today our total contracted revenue amounts approximately $42.3 million equal to an average gross daily fixed rate of $17,143 over an average remaining charter duration of approximately 0.4 years on a fleet-wide basis.

As we have stated before our adaptive, flexible commercial strategy mostly focuses on short-term planned charter employment, maintaining increased exposures to a long-term recovery in freight rates. This allows us to relatively insulate our fleet from adverse market movements in the short term while maintaining our upside potential on the firming freight markets.

Let's now's turn to slide 13 so I as to briefly explain how the increased spot exposure of our fleet is translated into an upside earnings and cash flow potential for our investors. First of all, the current spot exposure of our fleet is considerably expected to increase over the next three years as our 11 fuel-efficient new buildings are delivered. In particular, the 2,549 spot days in 2014 we surged to over 10,000 days upon full delivery of our new buildings.

Furthermore, our exposure to the larger higher-margin vessels will increase as well. We currently have 26% of our spot exposure attributed to Capesize vessels which will increase to 43% on a fully delivered basis with the addition of our two Capesize and five new Castlemax new buildings.

So currently, for every $10,000 increase in Capesize TCE rates and correlated increases in Panamax and Supramax TCE rates, our EBITDA, free cash flow and earnings for 2014 are increased by $14.3 million. On a per-share basis this is equal to $0.49 change in EPS, or 4.5% of our stock price.

However, the delivery of our 11 new buildings will result in a respective upside of essentially 4 times larger than the current one as the same increase of $10,000 in TCE Capesize rates will result in an improvement of EBITDA, free cash flow and earnings of $66.4 million on a fully delivered basis. On a per-share basis this is equal to $2.28 earnings per share, or 20% of our stock price.

In slide 14 we will try to evaluate our operational performance over the last five years. As a general comment, our cost-cutting efforts in our operating and G&A expenses have played an important role in our financial and operating performance in the challenging market environment of the past five years. This of course has been achieved without compromising our high-quality and operational standards.

On the left graph you can see the evolution of our average daily operating expenses. Since 2009 our daily operating expenses have been reduced from $6,903 to $5,629 the first quarter of 2014, an 18.5% cumulative decrease. Furthermore, if we adjust the $400,000 of pre-delivery expenses incurred in connection with the four secondhand vessels acquired average daily OpEx for the first quarter of 2014 were $5,342 per vessel, 4% reduction versus Q1 2013 respective figures.

Our continuous cost efforts are verified if we compare our performance against industry benchmarks such as the indices published by Moore Stephens. In particular for 2012 our average daily OpEx per vessel was safely below the respective benchmark OpEx of the industry while the same applies to our 2013 average daily OpEx per vessel figures if the guidance provided by Moore Stephens of 3% expected cost increase is applied to the 2012 OpEx benchmark.

On the bottom right graph you can see the total carrying capacity of our managed fleet versus our G&A expenses which exclude one-off severance payments and stock-based compensation. The G&A expenses are of course reflective of the in-house vessel management capabilities we have developed since our inception. As you can see, the annualized G&A expenses excluding non-cash items for the first quarter of 2014 at approximately $11.5 million, 38% higher than 2013 while at the same time our total fleet under management for 2014 will be increased by 52% on a deadweight tonnage basis.

Moving forward, we expect the expanded size of our operating fleet to provide us with further economies of scale and cost synergies to the benefit of both our owned and our managed fleet and clearly to our shareholders. And now, I will ask again Simos to give you an update on the market developments. The floor is yours again, Simos.

Thank you, Spyros. On slide 16 we summarize the dry bulk trade demand dynamics.

First of all, let's talk about iron ore, perhaps the most important commodity in the dry bulk shipping space. It is apparent that the international iron ore market will see substantial additional supply coming in from producers that have the ability of predatory pricing in order to capture more international market share.

This is expected to drive international iron ore price to remain at the current low levels, i.e. at approximately $100 per ton, a level at which the majority of small private Chinese producers are non-competitive. Therefore, we believe that the substitution of the expensive Chinese iron ore production with imported ore can provide a significant support to iron ore trade even with zero steel production growth.

Regarding now coal trade, as you can see on the left bottom graph, Chinese coal trade has evolved tremendously for the last eight years. China's increased energy needs have turned the country from a traditional coal exporter to the single biggest coal importer in the world in half a decade.

From significant coal trade surpluses up until 2005, China had a coal trade deficit of around 314 million tons during the last 12 months. Similar to China, Indian coal imports have increased with a compound annual growth rate of 25% during the period between 2006 and 2012, reaching 157 million tons per annum. Going forward according to Clarksons, India is expected to reach 191 million tons per annum of coal imports in 2014, an increase of 21% versus 2012 levels.

Lastly, as the grain season kicks off in the second quarter of 2014, we expect this to provide an additional uplift in Panamax and Supramax freight rates. Grain is a commodity that is carried mostly by Panamaxes and Supramaxes. And according to Clarkson's grain exports are expected to increase by 3% this crop season versus 2013 levels due to higher crop yields and production in the US and Canada.

On slide number 17, we are trying to do an update on the supply side. Dry bulk vessel deliveries have peaked in January and March 2014 and currently stand at 19.4 million deadweight tons. This is however expected as ship owners tend to prefer and push for having their vessels delivered in January of the new year.

As you can see on the top right hand graph deliveries in the periods between 2008 to 2012 have an average slippage rate of around 30%. This respective figure for 2013 was close to 40% while the annualized year-to-date deliveries imply a 23% slippage rate substantially decreased and below historical average.

Overall, as you can see from the top right graph, putting the forward scheduled deliveries in the historical context clearly demonstrates that the worst is passed due for the dry bulk industry. The nominal order book stands at approximately 22% of the fleet substantially lower from the peak 80% in 2008. Furthermore, if the nominal order book is adjusted for orders originally placed before 2012 it is reduced to 17%, a level that can be more smoothly digested by the market and in line with historical levels.

On the bottom right hand graph we also provide the order book for the remainder of 2014, 2015 and 2016 broken down in vessel classes. At this point in time we can safely say that the order book for 2014 and 2015 is fixed.

Finally, what is important and encouraging is the fact that bulk carrier demolition has stated record high levels the last couple of years. 2013 scrapping activity of 22.2 deadweight tons was very close to the second highest all-time level of 23.2 million deadweight tons in 2011. Going forward and given the firming of freight market we expect the scrapping activity to be reduced but still present since 9% of the fleet is above 21-year rates.

Please turn now to slide 18 to summarize the effect of the above on the future of the dry dock shipping. Overall, while the first quarter was a seasonally soft quarter year it has been better than last year with average spot rates being 56% up versus respective levels in the first quarter of 2013.

The current outlook, however, remains compelling. As the grain season unfolds and iron ore purchasing activity continues its exponential growth we will enter into a tightening freight rate environments expected to peak towards the end of the year.

Clearly a catalyst to the strength of the freight rate firming over the next quarters will be the presence of Brazilian iron ore exports to China which will have a multiplying effect on the growth of shipboard trade on a ton per mile basis. Over all the analysts� consensus and the demand growth will outpace supply growth in 2014 while for 2015 this gap is expected to increase evenly. I would like now to pass the floor back to Spyros for his closing remarks.

Thank you, Simos. In conclusion, we believe that investing in Star Bulk, as is depicted on slide 19, offers certain distinct benefits.

First of all, our flexible chartering strategy, our fleet is poised to benefit from the dry bulk market recovery while we do have the financial power to capitalize on any distressed opportunities that might arise. Secondly, our investors get exposure to superior assets with a diverse quality model fleet including 11 top spec equity buildings ordered at first-tier yards in Japan and China.

Furthermore we focus on what we do best, that is owning and operating dry bulk vessels while we have diversified our asset base to higher-margin vessels such as Newcastlemaxes. Being experienced fleet managers led by Chairman Mr. Pappas, we have expanded our shareholder base to our credit institutions such as Oaktree and Monarch, clearly a vote of confidence in our transparent and efficient operations.

Lastly, we possess strong, transparent in-house commercial and technical management capabilities of which we take full advantage by managing third-party vessels as well. This activity generates riskless revenue, diversifying our consolidated cash flows.

Furthermore, as the size of our operating fleet increases we enjoy substantial economies of scale and cost synergies benefiting both the third-party vessels under management as well as our own vessels equitably. Overall, we believe Star Bulk will be able to favorably compete and ultimately shine and prosper in tomorrow's dry bulk market.

I would like to thank our shareholders for their ongoing support and loyalty and reassure them that we will continue our efforts to ensure the Company's long-term viability and enhanced shareholders value. Without taking any more of your time I will now pass the floor over to the operator and in case you have any questions, both Simos and myself will be very happy to answer them.

Thank you very much, sir. (Operator Instructions). Ben Nolan, Stifel.

Yes, thank you guys. My first question has to do with something, Spyros, that you mentioned. You guys are calculating your NAV to be about $13 a share, obviously premium to the where the shares are trading at the moment but by the same token you have about $80 million in above-market new building contracts.

Have you given any thought to the idea of maybe selling one or two of those to monetize on that difference in both to reduce your CapEx commitments? But then also to close the gap between where the share price is trading and net asset pay?

That's the only answer, the only question then I can reply to Nolan, to Ben. Ben, right now we haven't thought about selling any of our vessels, right now the market after the first quarter that there was a surge in prices, right now prices of vessels are in the new buildings or also the second hand vessels are quite softer.

And therefore I don't think it is the right time to sell any of the vessels that are under construction. We feel that with the upsurge at a certain point and the recovery of the charter rates that prices of vessels will also get the benefit from that.

Okay, well that is helpful. That leads to the next question, obviously you guys don't have any capital commitments, unfunded capital commitments this year, but they are starting next year does move up to I think you said $77 million. How are you thinking about funding those commitments?

As you said correctly, for this year there is no capital expenditure commitments. Now for next year starting in the middle of next year we expect and we have the possibility from now until that time at a certain point when the market is better I think that we will have the possibility either to find ways and finance our new building program or raise equity at a certain point. But I think that the commitments that we have are not such huge that could create any difficulties in the Company in raising the money.

Okay, that's helpful. And then my last question has to do with the G&A.

I know that you guys have hired a larger land-based office, well, more employees on the land side to facilitate all of the new buildings that are coming on, that is completely understandable. I guess my question, though, is should we assume that the G&A rate you guys had in the first quarter here is a pretty good run rate for what it should be in subsequent quarters?

Ben, I know that the G&A is something important for us and we've shown a commitment to reduce always our G&A cost. With the assumption of additional vessels under management you have to hire the people in advance to make sure that those vessels will be properly managed. And I think going forward I think the G&As and G&As per vessel will continue coming down even though in this first quarter it has come down but not as much as we would like them to come down.

We have a goal to have G&A expenses of lower levels than what we currently have. On the previous question also about the raising how we're going to finance the capital expansion program, of course that depends also on the market developments and the charter rates that we are going to achieve because if the Company is also generating a nice cash flow from the operation of the existing fleet that we have in the water. Therefore, the higher the charter rates especially because we are mostly spot, the more cash we will be generating and then the lower the capital expenditure financing requirements will be.

Okay. That makes sense, and that does it for my questions. I appreciate it, guys.

Ben, just to summarize on the G&A expenses, what we do internally is actually in order to be comparable with previous quarters we subtract from the G&A expenses the revenue that we have from management of third-party vessels. Because actually in order to manage third-party vessels the only additional costs that we have is wages, so it is G&A expenses basically.

So to have a real comparison we subtract from G&A expenses the management fee income. So if you apply this net G&A expenses to the owned vessels this year and last year, the year-on-year reduction is about 2%.

Obviously, it's not too much but it's to the right direction. And you have to keep in mind that when we are preparing for further growth of managed vessels capability we are hiring people in advance of getting the vessel.

So basically this is a cost that you have to take now in order to be able in the next quarter or in two quarters from now to manage the additional vessels as we come to our fleet. And we still believe that the G&A expenses per vessel will go further down from the first-quarter 2014 levels.

Okay. Well that's helpful. Thank you.

Harsha Gowda, Blue Shore Capital.

Good evening, gentlemen. So I have three questions for you.

Number one let me just thank you for the great detail you went through in the presentation. It was very helpful and it really shows how much you have achieved in the past few years. So thank you for that.

My first question is in regards to one of your competitors announced that they are working on a settlement with STX Pan Ocean for a charter hire termination. And they were going to receive cash and stock and roughly they could sell the stock and they will get about 20% minimum compensation on the entire claim. Have you been proceeding with that also on the broken charter, I think it was on the Borealis from last year?

Harsha, yes, we have, as you can understand we have a quite substantial claim for STX Pan Ocean from Star Borealis. This has gone into court because we have not managed to find an amicable solution with STX Pan Ocean.

The case was discussed actually yesterday in a court in Korea. There was no amount that has been adjudicated because the court has requested STX to provide more evidence on their numbers. I suspect that we are going to have a number adjudicated to us but I cannot say more about what this number is going to be.

Okay. Another reason is I saw in Western Bulk's recent presentation that they came to a settlement with a breakdown in shares and cash. And there was a decent accounting effect and considering how much the claim is that could be a nice chunk of cash that will help with the capital raising for next year. So I hope that goes well.

Harsha, all the claims are not adjudicated by the court at the same time and some of the owners have decided to settle with STX outside of the courts. In our case it was supposed, our claim, to be discussed yesterday but there was not a decision.

Still you have to keep in mind that if and when this is going to be adjudicated, it is going to be a settlement over not immediate, actually it's going to be settlement over the next 10 years. And it's going to be 30% or so in cash and the remaining in equity, this is what we have been advised actually by the Korean lawyers. And most of the cash is going to be tail heavy but still we are expecting from the court to get the final decision.

Okay, and just to be sure the total claim is roughly about $70 million, correct?

Yes, this is what we are claiming but of course it's not, we cannot say more about and discuss more about this claim while this whole claim is in court.

Okay, okay, great. I just wanted to see if that was preceding. It looks like it is.

My next two questions are more industry focused. One of your competitors in their call they were talking today recently about the slowdown in the Atlantic basin in the second quarter, which was for the first time in they said in 30 years they had seen a relative weakness versus the Pacific and most of it came down to South American grain season not panning out like everyone expected. However, they said that because this will eventually come on the market and most likely in the next few months, that there could be a more positive impact due to the fact that it will coincide with other seasonal aspects such as the US grain season.

Do you think that? Is that your view? How do you look at that near term?

We are happy if something like that happens. We do not base our calculations on that.

We have also suffered the weakness in the Atlantic because also like so many other people we had repositioned some of our Supramaxes from the Pacific to the Atlantic so that we are fully balanced. But both markets were very weak and we suffered. And I think we suffered also in the second quarter this year because of the continued pressure on the Capesize rates mainly because despite the fact that China imported much more iron ore this year and last year, still most of those imports came from Australia while Brazil was down in volume of iron ore exported to China.

And therefore the ton miles were reduced and that's why we think that the weakness of the market on the Capesize, that's what resulted in the weakness. But we expect that Brazil will pick up in the second half of this year and that's why we are quite optimistic about Brazil's iron ore exports to China.

Okay, great. And my final question is a little bit more general but considering the recent election of a very business friendly politician and party in India and the plurality that they have to get things done, are you starting to hear about or seeing any increased import demand, or shipping demand?

Because they specifically said the first thing they are going to do is increase infrastructure spending. And considering how weak India has been the last few years that could be hitting very soon. I just wanted to see if you've heard anything about that, increased coal or iron ore or anything like that?

I think that's a very important point that you make. We have all been very happy with the changes and listening to what is happening with India. We haven't felt it yet in the market but we think it's a matter of time that India will start importing more on the coal side.

But also that I think with a declaration that infrastructure projects will start I think that will give another boost in our market. Because up until now we had China, India was lacking but India will also be an additional source of increased trade.

Great, thank you. That's all my questions. Thank you, gentlemen.

(Operator Instructions). Jonas Kraft, Pareto.

Good evening, gentlemen. I will be very very quick, most of my questions have actually already been answered. Returning to the market and your expectations now for a latter half of the year, if the market moves higher as you expect, will you consider fixing some of your vessels on longer time charters or will you continue riding the spot market and employing them in the shorter-term duce market?

That is also a good question because we just asked this on our weekly management meeting about what level would be a level that would start considering chartering vessels longer term. But for the time being we don't have this problem because the charter rates remain quite low compared also to the 10-year average if you exclude also the 2 years of the super-cycle still, we are much below these levels on the Capes.

But of course if the market picks up and we see market rates to be at a level where we feel confident that it is worth start hedging our position then as we are doing with interest rate we will be doing also for the charter rates and probably will start chartering vessels longer term. But not at this point.

Will you share what levels you are then thinking about?

Well, that's the thing we don't say. But at this point when you have one- and two-year rates for Capes at a little bit below $25,000, we don't feel that's an appropriate level to charter.

Fair enough. Thank you very much, gentlemen.

(Operator Instructions). There seems to be no further questions at this time, gentlemen. I would now like to pass the floor back to the speaker today for any closing remarks. Thank you.

Well, thank you very much for attending the call on our Q1 results. Next week is Posidonia Week in Greece where many people are coming from around the world.

I think it's going to be an important meeting of the shipping world and that many positive news will come out from Posidonia and for the market going forward. Thank you very much for attending the call.

Thank you, ladies and gentlemen, that does conclude your conference for today. Thank you all for participating and you may now disconnect.