GNK - Earnings call transcript Q1 2019 | Genco Shipping & Trading Limited

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Operator

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited First Quarter 2019 Earnings Conference Call and Presentation.

Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the Company's website www.gencoshipping.com.

We will conduct a question-and-answer session after the opening remarks. that at follow will time. Instructions the A during and be XXXXXXX. anytime will next replay entering X passcode XXX-XXX-XXXX of the or weeks accessible XXX-XXX-XXXX conference by the dialing the turn conference will I time, this over At to Company. the Please go ahead.

Peter Allen

morning. Good

Such Before such other Private this call, and of in Act Securities forward-looking pursuant Litigation we note believe, harbor and as safe plan, circumstances intend, based project, expect, current XXXX. and connection certain conference performance. discussion estimate, to making similar Reform on of the we the or financial our expectations in are forward-looking be observations. potential words provisions begin meaning words I forward-looking or budget, terms statements events, that statements anticipate, These statements management's future presentation, use will with of of operating future the

on discussion to please differ, Securities and issued to Commission, For Company's on results that that see including and morning, the the the factors Chief Officer this the a subsequently cause XX-K was with SEC. press Limited. limitation, of this the the Shipping filed report would Company's December materials Form and Wobensmith, annual Company's Company's ended relating with for filings the report release I posted this could to Exchange of time, call & Trading the Company's At introduce XX, XXXX John without like year the Genco Executive website

John Wobensmith

conference quarter I first call first Good begin Genco's and reviewing XXXX call. quarter morning, Welcome highlights. everyone. to our by will year-to-date today's

Starting quarter highlights. review the call industry's year-to-date for on quarter questions. the open fundamentals financial current and results our discuss for we and then Genco's Slide X, then the will We first up and

and period $XX.X of the million $XXX generated balance the of we million During sheet. concluded quarter, the EBITDA cash on with first

commercial the quarter approach the benefits effectively our to as evident active in operated through bulk in We approach and composition, freight fleet exposure first rate major were our The of strategy barbell this both maintaining a challenging to draw minor upon continue to commodities. we environment.

significant under important class, XX vessels bulk the through fleet strength such to smaller of and the in remaining during vessels Specifically, of class while steadier quarter. upside An of trade and Genco exhibited ownership is stream grain, cash this cement, vessels for iron expected asset among the the commodities, XX the pressure, other Capesize bauxite, sector while transport minor various of earnings provide ore flows. fertilizer differentiator the as came materials the Capesize are with us the relative of we a maintain potential market the that

continue During support favorable million amended our facility the to $XXX in terms. we of In quarter, we also XXXX strategy. credit under IMO access comprehensive our capital February,

of additional of program, our Specifically, in Apostolos discuss tranche details to later portion $XX will the amendment the up provided a scrubber of finance call. the to million an which

third fleet. As compliant portfolio on IMO ahead minor of first our XXXX, we bulk quarter January. the this have fleet this our to built concluding of continued last of program, our renewal execute focused in consuming have and fuel our by vessel later and scrubbers previously, we the Furthermore, mentioned installing and occur Capesize year. approach vessels are to in selling end our We XXXXs installations month we implementing scrubber growth on anticipate a

our to ability by reduced strengthened and average both the earnings success has and power capitalize X Our on rate future modern, vessels and older of today tonnage years divesting fuel-efficient fleet age improvements. purchasing our

Slide market platform. we have our Turning to outlined leading X,

direct while incorporates charters voyage to which results. leveraging strong relationships active led our and commercial strategy, cargo expertise commercial in-house and Our liftings, has

$XX incremental in per sub-indices outperformance This Exchange relative million. by $XXXX the day, time a resulted equivalent Specifically, day. income $XXXX charter Benchmark per in approximately approximately of adjusted leading the first quarter the we of recorded of Baltic net

XX-vessel the of the and the to based annualized basis. booked on X New fixtures on During in our XXX an commercial year, during equating months over quarter platform XXX Copenhagen our Singapore fleet, global York, over first fixtures

business the nearly to prior XXX from time we Additionally, in period. X days year our increased chartered-in

time we vessel, rates equivalent a it While to of capabilities, believe get the barometer picture. is to as important basis, expenses measuring revenue also full charter day as operating on believe we the performance G&A, TCE that important a view the is Company's well generation very per alongside per

platform, and performance has through a In structure steadfast addition efficient registering generate strong maintaining capital. wider us return on QX, to margins better commercial to commitment our our TCE cost XXXX active enabled an to

XXXX an for optionality In terms QX, for fixtures our have maintained providing Company. the to-date, we of opportunistic strategy,

January. As quarter a of XX% low, time the approximately charter that per fleet of April, we Capesize at such beginning at fixed but day. has of rate approximately We the seen to-date, market the not equivalent since note in reached to rebounded $XXXX year-to-date levels have meaningfully its the since

supportive outline major positive half drybulk contracts on XXXX forward. the utilized the approach, market, and relates long-term in On the the weeks several towards we will market. for the from remain freight fundamentals it chartering X, of we benefit Capesize improved expiring catalysts could potentially have a continue to second we We as sector. a spot-oriented Slide have As going drybulk XXXX and look to that market more especially coming

key of of we the us ore We situation value in following with increased restocking Currently, we been can as management first an occurred the of Genco our differentiators continued of view balance industry. for both trade sheet a volatility half is short-term balance cyclical we our market prospects. a volumes strength rate demand create second strategic our China, overall The importance we coincide iron and highlighted on position, met major the opportunities Furthermore, large-scale After of we will has the of solidifying and dominated as approach plan which first low times importance the this seaborne the as in remain to drybulk pursuit long-term believe mentioned solid last transferring cash in several net the in of see the to of to direct are the of a liquidity continue destocking earlier freight Genco, enables present could major over balance softer for that further which during last ore the by of believe approach creation by transformative scale This progression believe platform. highlight historically and team, be available weeks. the position bulk Slide during of carried believe shareholders. we factors, strong deploying of iron focused of to We further the distribution the exposure long-term growth. solid sheet of over likely minor we X fleet global tensions. unfortunate as Vale closely which take the composition, a with commodity of fleet and to sheet our year from environment commodities, commodities trade our and strength of advantage related and that we that year, transactions seasonal of has position opportunity if we our our by right as developments commercial flows. years, On that highlights minor majors our the fleet The mirror U.S.-China in the well X, arises. half fleet, platform the larger market the quarter

as world. portfolio believe cap X, Turning enforcement we regulatory is air taking previously taking that We a XXXX is, global for a step IMO compliance. to reduce approach key maritime implementation of a effective described, Genco sulfur the it and we is the industry to around as advocate to entire overall is Slide a collectively the emissions method

to include measures for performance. and Muse speed new vessels, as emissions. overall the to collection In installation of leading software years our adhering of own on global regulation, as addition initiatives XX optimization to reduce docks Genco has considerable consumption in implemented the savings, its fuel These recent overall and carbon our fleet to optimize to real-time trim the of of well data several

fuel-efficient opportunities a added fleet Officer for selling I older, consumption, the will our Zafolias, turn have and now our forward. financials. Apostolos reduce our to for Company emphasis to Chief fuel discuss as going this call while we Additionally, vessels fuel-efficient over tonnage seek we the modern less that continued will be Financial

Apostolos Zafolias

John. Thank you,

are to Turning financial results XX, presented. Slide our

ended increased vessels revenues The March $XX.X XXXX, three million. XX, compares Company quarter the the $XX.X revenues the to revenues on of as months of with generated time primarily three voyage million. for employment XXXX for market This due of the months charters. the For charters were compared ended XX, to spot

$X.X the recorded a $X.XX million compares Company of loss the loss diluted of basic quarter per XXXX. or and for XXXX, net share. share This of loss $X.XX quarter or loss of $XX.X per first net to basic million a diluted first and the For

sheet items balance to we XX, Slide of XX, key XXXX. present Turning as March

cash, cash $XXX Our million. restricted position, was including

primarily and were our assets Our the vessels cash. total consists which in of $X.X billion, fleet

million and of XX, debt unamortized Our total million issuance current debt, the XXXX. of as debt $XX outstanding, of costs $XXX.X inclusive of March portion was long-term of gross

Moving to Slide XX.

first was this of year. Our utilization rate for XX.X% the quarter

vessel was quarter first in per per to in rates per below versus majority budget per our Daily was compares vessel by of due XXXX per day same expenses our $X,XXX first TCE achieved the vessel day day. the year. for were of per which decrease first TCE vessel of last during last quarter the fleet primarily operating the period per quarter, lower The $XX,XXX first the year. Our day, vessel in recorded per to of vessels $X,XXX quarter the of $X,XXX the for

Slide consists our which credit to facilities. Turning structure, debt highlight of favorable XX, we two

a the structure, have credit that an a growth at credit XXX February, of to Genco up acquisitions. facility These plus expenses million $XX to our to of acquisition indebtedness, will the LIBOR two capital additional Borrowings potential completed a September XXXX. $XXX basis us flexibility dividends under XX% while simplify vessel plus the $XXX range to $XX and interest enabled our Following credit in and Furthermore, tranche LIBOR John basis closing million our we mentioned, of finance scrubbers. XXX points facility year, upsized of of facilities to thereafter. installation to providing as XXX will $XXX related facility, XX, this bear million our additional in added last of we providing fund through million million regard fleet in and points portion tranche

million the facility $XXX balance can sheet. during our expenses we that drawn strengthen the a the of million incurred liquidity credit strategy. believe of balance strategy that along encompasses uses. key currently and We Company's capital allocation We optionality on liquidity is of both reserving liquidity it weighing short the long-term in we pillar an the reflecting with $X.X strong of $X.X ongoing basis, the strong evaluate our be sheet $XXX provide select impact position scrubber-related which the further to million note, Additionally, quarter, under to Of slide. our million items,

Moving in second day Genco's be of XX, associated outline quarter to vessel breakeven second we of We for rates. estimated approximately quarter this rate XX XXXX. $XX,XXX the Included our to Slide vessels. breakeven per anticipate is with our figure the drydocking cash per

capacity of of us earnings strategically half stronger front widening to these have potentially to and for loaded towards Capesize the We the in the fuel of our scrubbers the allow advantage maximize year our also seasonally the vessels on optimize to installation to the take year. drydocking end a of vessels spread of order second

presentation rates for of quarter. ballast will systems of the our breakeven the over in Analyst reference. In Peter discuss provided Allen, appendix incur costs the to the we these certain million addition, installation industry $X.X of during drybulk We've to further turn on our call now with second also to of associated vessels on your one-time the our treatment water market expect detail I fundamentals.

Peter Allen

with the the I'll rates Apostolos. represents begin Index. XX, daily which for sub-indices Dry you the Thank Slide of spot Baltic

of During year. the for which the quarter the typical came BDI seasonal-related beginning under XXXX, first is of pressure, the

decade, In year. that relative the trend BDI all prior this This out the currently again fallen XXXX. fact, playing each in in compared a is but to QX to as the Subsequently each year's has is X QX increased QX. in BDI has once of in QX

to-date, year have the more volatility the have smaller their During as displayed the on sectors most the of earnings. while the terms in page, seen Capesizes course of resilient been

importance the John earlier approach development our fleet to has composition. As in call, barbell highlights mentioned the this rate of

end particularly for well the XX the due as restrictions January. at Vale Capesize market. U.S.-China majors unique particularly historically regarding levels period in tragic Australia newbuilding shipments million the order ranges of availability, tons million On in China, a to ore drybulk to latest of of evident iron tons cuts, which the by has softer provided XXXX, as of is dam coal representing cyclones iron the what the QX. in sales book, in of the negatively disruptions as deliveries of nature overhang production it as in totaled to on vessels, XXXX, sensitive output. for accentuated impacting trade from XXX guidance became developments XXX impacted several New very These already the seasonally the these earnings in ore announcements as including million Vale This to front-loaded year-over-year of was which decline sales have March. compares well materialized The million developments, million XXX million the the factors from dispute, top by were as a XX XX Chinese Year tons. tons made the of As collapse Vale Increased celebration been following factors of weather-related holiday February, to case, cargo

of XXXX, incentivize fallen to the terms XX million by amount XX to million note China, of has had increase in Ministry inventory in draw-down helped volumes, American's ore is ton. Australia seen as output lowest of of last XXX most accident and in the the of ore production, Steel ore ore in million fallen year. high, China, Veronica October has draw-down year-over-year XXXX off to has its tons led -- lower expected the stockpiles million of has China's to the below by year. portion which seaborne total a production we which the to This of ore port Vale XX. iron ore a partially price cyclone XXXX, the tons, World XX% iron effective ore cumulative ore led price Anglo representing stockpiles XX year-to-date. to the Vale steel to in according XX April to million has having outside million tropical lower The iron generally rising $XX last seaborne compares the the of in This since range over iron strong ton increased Association nearly steel Despite levels, Brazilian impact a imports tightening per that year. import is is incident year-to-date X% prices, in points iron $XX fluctuated steel and per volumes. This from Slide The iron are since to Vale, In a depicted the iron prices highs iron high an combination Mines steel stockpiles of their March, of XX to $XX of that offset November in tons, be the increasing price highest multi-year in to steel have start The of during Furthermore, as decline by been while on of market. increasing at steel China. and level in since steel last strong demand tons declining of to

growth highly the drivers will be in positive the challenging, do well is as Chinese to to coal short by disruptions market coal of for trade increase developing mine resulting accidents inspections, remains coal have of display countries power stockpiles the approximately In country's push year These believe of April. it since China's led through forecasting the demand. continue coal the of policy. end in widespread primary are output, X% February. terms coal that supply in that long to governmental seaborne domestic safety We have firm top we year-over-year on coal this the domestically. as plant On various term, the higher dependent imports term Asian trade, XX% Despite indicators this, are fallen this but know India, multiple imports

points of bulks. the minor key Turning regarding the XX, Page we some to highlight

expected American in continue its season, We in strong are soybean is which peak South grain currently to Brazil to shipments China.

to Regarding China, nearly QX as note that X tons tons shipments rebounded compared million we U.S. QX less to in to XXXX. soybean than X these shipments million in

XXXX. However, than this QX, less XX% remains level approximately

U.S. On between trade a large-scale soybean on been American as is response through has for exports and we market the countries. fundamentals. in North to QX of have believe increased newbuilding a by reports end supply we of terms XX agreement older two season the towards China, deliveries. as high well conditions outline the dependent side There a grain of there While tonnage, rates U.S. of normalized slippage been current Slide scrapping purchases that year XX,

Capesize This full So far tons X.X been the year, has led total. million by tons to XX sector, this million scrapped demolished has as already, of matching last dead been XXXX's weight year. X.X ships weight compared have year been all scrapped dead primarily

just this vessels with potential of greater on of last years scrapped Importantly, an XX year the been remains these dead XX in tons of candidates. weight approximately There to compared that scrapping VLCCs than have average one all are year. converted four XXX,XXX water

as vessel regulations, year-to-date, an In net an drybulk we that contain environmental pace XX%, has this the under is order will upcoming the on-the-water to uplift Given of which at equal year approximately demolitions anticipate years book is in fleet X%. to the percentage help of XX compares annualized grown current or of the a fleet overall fleet fleet growth. old. that than greater The drybulk X%

last preparation China, weeks ore been the catalysts additional construction remains in and order supply and side the these a XXXX. that support actually running have slippage book low is restock recent iron out and year's We deliver. underpinned fleet XX% and ore of the IMO how rebound central XX%, ahead by The spring disruptions at second of the seen fleet the has could we'll be an this As due approximately by drivers certainly on American positive we few global since there the grain to currently half the XXXX, year from a season. will demand much the average volumes that half. BDI to South These peak growth include to Brazil market. of point are iron of of be in compared net as that believe Australia believe over increased first rate of the environment in there season We

On the take fleet and concludes X% markets year-end. December happy fallen be These supply by in This have a growth factors January newbuilding to over to compared July now from side, to presentation questions. period, same deliveries that as the nearly period. our to to XX% your to reduction June tighter net have leading contribute we would helped towards nearly

Operator

question our with And Randy first come will Instructions] Giveans [Operator from Jefferies.

Randy Giveans

the So And a same the in looking day of what and or of more something more age, geographical Was trying we short-term should out it asset drove the benchmark your at pretty $X,XXX this. figure Copenhagen, else. fleet Singapore, outperformance impressive to XQ indices, the because of of mix, timing beyond? expect the in importantly, just positioning charters, offices 'XX

John Wobensmith

that to some by target take into cargoes disaster, because entire sort to also as weather we into supplement the of set would Company to the those year able move outperform fixtures arbitrage outside you, said account it think cut well Okay. a to but but to to very months. Obviously, first our use of book continue think the will Probably though, care, through fleet. take people's we overall, we above, if down our what lot again, to the you be to to this other really is we day. we be I the Vale a all weren't for of I and it. ships year. I and I've trades fixing going number soft take that we to XX of enough had you good in get a the quarter the owned had advantage the $XXX and ships first to of fourth expect what was forward were it, overall absolute really, our forward that pressured tell end look the our Obviously, if before, we quarter the and tell a us of of this own cargoes strategy and quarter. did it's, Hard were up and is performance believe we get done, we at

Randy Giveans

that's with Okay, a in much are now, fair. spot freight XQ better to a day, your Capsize then this, $X,XXX forward agreements rates although day. look $XX,XXX rates something And 'XX around down like

your So will you Capes scrubbers all the XQ end of mentioned by have 'XX. installed of that

in of So tonnage some FFAs spot time maybe charters or are the installed? do on you market expect once thereafter lock the away or to operate the long-term scrubbers these

John Wobensmith

aware, I think you we are don't FFAs. trade

there see on maximum any, now. you trading to scrubbers, a being that to I of basis. So into I really see Look, be don't voyage need benefit the get place out don't put

you sulfur sulfur XXXX, this happen. to tell a next fuel think, widest would as that half be and One, and the that, strategy second the through will scrubbers XXXX, the have all its I are burn the going the of probably will of maximum at year high So, year. going end that oil of first and things, spread ability oil, way half fuel low think and then towards ships our the versus look be of at between the to we we couple we into

So be in position advantage of we that want to XXX%. take the to

dynamics, back and will of and year operations start positive. certainly get get as XXXX, As We of Vale obviously XXXX. and going, believe end again of the to up we supply-demand look at their we of and for come we back a this this year the are towards second the half lot all into

mean, definitely Pete mentioned, the today, price historical that's where that's a certainly ore as regulatory net iron do So a can, as and standpoint. fleet at year, are as we're, from they to Low positive quickly of incentivized a growth we that only low. is at, is factor that next X.X% projected I think they

And now $XX,XXX a seen remain to from it little done charter time back $XX,XXX is the Capes day than a why anywhere your just going time question that's also more to few we've a we interesting, day. side, then on So a X on for positive. charters year,

to an end Capesize comes we from well do bodes confidence think the from on, side. and want be put going we putting though if opportunistically opportunity clearly forward year the scrubbers that will certainly economics we can away I we year chartering at for scrubbers, tonnage and into Even the there the next the still the and at get of this that we will that. will look market this in So

Randy Giveans

Got one for been your it. done you peers question, in vessels then fleet obviously has next on in last quick expect some that? yourselves year, And have and earmarked timeline those so still seven of Do sales of renewal, you few be sales some What's recently the January this for kind there selling the quarters? your Supramaxes. to

John Wobensmith

in view quarter it a very weakest standpoint ships time smart, in tends selling to period as Look, I the sale We be only that Genco we think it and approach. that mean to standpoint. so first ship is that don't sold, a we January. the agreed opportunistic a quarter, in fourth I the valuation of the freight it more Vigour, delivered actually the typically we, from rate the

half the the with focused So the of anything now. again on in than values year, expectation more that, right firming second of be will we

Randy Giveans

Sounds good.

over. turn Go I'll it Okay ahead.

John Wobensmith

just about a getting Look, we're would capital. outperforming thing seven nice it's return on earning and good I our we're say ships. well, benchmarks No, those

those. transaction So sure luxury have selling say waiting I would for we of the -- really get right to we the the make

Randy Giveans

again. thanks Hey, it. Got

John Wobensmith

Thanks Randy.

Operator

Thank you.

with Our comes next Fjermestad from question Fearnley. Espen

Espen Fjermestad

of benefiting from more the restart potentially into put not to supply also the mean, want to confident at of higher but good are the I a the greatly that guys seeing volumes regulatory I likes perspective, a from you elsewhere. Hey moment. are [Indiscernible] -- they only challenge the market, guess, you mines the new bit around and made how morning. comments I wanted on you prices

John Wobensmith

third higher they ramped prices, in get think incentivized get highly I as I these to think, as quicker line in fashion. also over I benefiting it's are I back a possible Do next up going as this of happen but and fourth happen quickly they think in said, quarter to, SXXD greatly from the year, are but -- some do facilities Vale facilities to and the certainly weeks? a robust recovery that to think more China more few will Yes, towards I XXXX? restock and No, Malaysia. of much start it I in quarter their needs think they

So a February if on the my from I sales guess is those I those -- said, you run that have of down. look think well. inventories, and inventories as that and are at standpoint March, from I they And think shipments occurred their are as existing focused really in

they back to up again. built be So will need

Espen Fjermestad

Alright. I the inventories are it's not they're fair guess a that Chinese Brazilian in but are low -- context. low, historical ones

stop the the prices So, ore drawing iron the from where are seeing on of kind what's continuing going to inventory the moment? at Chinese

John Wobensmith

think don't I anything does.

continue I environmental of quality think they'll air improving to has quality. are nothing terms changed getting into and we China to focus issues, draw down, some but degree, in in the

higher ore inventory. you on agree with little bit on which that So iron be near high you China, I inventory. continues be I think issue take you they in lows, historical to with but the means quality ore certainly will absolute grow may the production in not demand. have numbers would I steel a should

where this part that I sort come market of coiled could a into and a So I think think we year, restocking occur. could we latter And see spring, the a tipping be this restocking of as to point. some this will the also major get

Espen Fjermestad

the, Fair on side examples longer tanker guess installations, the far, been finally, processes these on than the you lot anticipated. a equipment there couple the taking And now then the hear the people where on scrubber I a have to delays enough. of any yard guess your side I kind planning side? whether and so upcoming installation see on experience are Curious or with

John Wobensmith

ships and in. don't our slots in certainly we see any getting of Well, delays the terms

first As begin we're I in will days. said, installation do the, about the going first one, XX the to

ship this anticipating So, scrubbers lot pre-fabrication earnings do done getting able to a the going have But six of September are lot there. XX, the six report more of everything the been yard still year. to having We're I'll and our do quarter we ahead as have second do we in quarter, call. a of to we by this of

couple So yes, Capes. the rest look, around somewhere come ships may maybe first we But down expect the of days. we're that of take the mindset, number XX the do to still we of as

Operator

you. Thank

with Our from Bank. Snyder comes next the Chris Deutsche question

Chris Snyder

So high but prices iron iron to to production prices ore other wondering, advantage kind take down starting Vale fill ore ramp price, I of iron you was high levels, bring the regions higher have, and of void? ore inventory noticed have these to

Peter Allen

little the Canada. from more the a But and are central they would issues see event. be and that sort cyclones. own pick thought of years really India put Those We a and few up stranglehold see the turnkey yes, the keep players. ramping their South essentially mind have this little regions. could well, over the Yes, market, main a was up are I not with we But bit, two necessarily it's Australia a they could in Brazil that on Africa Australia where growth have bit last mean

capacity that's positive have in much CapEx. in as a in obviously years. seen there coming there's Fortescue we invest So out hasn't is not spare and a on of new One few there that ton mine new though investment been a

Brazil two terms But a the main increasing of actually So Australia. players capacity. overall obviously that and yes, step in direction are was the right in

John Wobensmith

at a bounce the and of of spot and and What shipments back right only look day in one now April, the South been in is very you out thus major three if far, yet had on lows there Capesize there's that the $X,XXX coming out of I in of May of only find Australia is and that a Africa. we've sector, interesting really were Brazil, off shipments

the just rate see side, is So a you seeing back hopefully, spot now. good does to the side, back right go improvement think TCs on these you're the market when in can spring way into I'll meaningful I in come done loaded a this high-teens on Vale again, the X-year why Cape imagine, which we

Chris Snyder

trended like that's ore you steel I growing seems of and positive so XX% the ore use a XXXX? it just Yes. for you far iron metal context in year-on-year, XX%, production? iron And China steel the production Obviously it's China maybe talk about imports headwind there, mean still that of about talk can how in XXXX. in inventories obviously scrap in lower can was but for

Peter Allen

something that's about overall of steel actual the Yes, of a been in when scrap It's I really XX% figures, production. XX% but hasn't about, you think huge steel to there production. overall in use at that's been uptick highly still talked terms been look scrap,

over when a small to still and talking close So about relatively you're XXX billion number, steel tons speaking. million it's of tons output, a

going to majority and of or furnace iron anytime It's going to up use more the XX% blast coal, range. the soon. XX% XX% through it but creeping be is ore in the production been XX% So it's but slightly, to not coking and is

Chris Snyder

Vale has it and back I Okay, of announced ask, understand could in interests fair markets with enough. where which today Then you I just will above this higher think re-suspension mines, some near-term to kind their that a pretty spot pressure. hung half, market TCE yesterday certainly also are guys And and the of I one at that's guys in but available Is $XX,XXX. are I inflect good, you something that Capes, add these the said staying just know more larger $XX,XXX, how is view of demand opportunities? because the

$XX,XXX in So $XX,XXX, decent context. that seems the pretty

John Wobensmith

reiterated guidance. Yes, their look, sales Vale also again,

So is, very be I'll my or don't to mine Brucutu original comments. that offline my go again guess back going is to feel down long. for they just

scrubbers. are installing We

second day in rates XXXX, subscriber now to a think maximize we fixing, think is time the the we way But positioned. well the charter, and economics certainly right up scrubbers said, look but a on because to we're are year having of on is as the because of the not But market. time scrubbers, of [indiscernible] of will compared rate. go economics If into economics well, spot strong rates half going a I So, we the the very the not $XX,XXX said but charter continue we advantage to right in can spot where the spot, in take the to as move trade that, at to and now.

Peter Allen

the, one production. thing other sorry, you that mentioned other Vale just yesterday their reporting thing I'll And one one add,

For their it bit the volumes XXXX. headline is at SXXD, production overall versus and if XXXX expected. from XX% more, growth QX QX, dig to you be showed obviously, a you into the look numbers increased which declines, QX, little But

still through is headlines. positive track, that on all a So negative kind is the of big which when view you

point well. to So as out just want that

Chris Snyder

mean the Interesting. for it. scrubbers appreciate And the the earlier then, certainly yeah, I on fleet, comments Cape

some to you just competing penetration what of savings? at you kind lastly, about talk and can penetration of scrubber to maybe Cape do these market the so, And of about cost away you where worry expect up start XXXX wind level in

John Wobensmith

projected, XX% if numbers the least I what's at think at look probably XX% to of fleet. Capesize you today, the it's

that that be is as And at number. have-nots I look significantly the the and larger don't guess probably haves I the any, have-nots, best the put to a way going as it. I to that's look So, at

So to think fleet economic in down fitted. it XX% will competition from I of the, the the standpoint only scrubber constrain margins XX% or don't scrubber push with

Operator

comes Max Morgan with Stanley. question from Our next Yaras

Max Yaras

very like market, obviously allocation capital are ask at you point recognizing a a balance. still weak a because cash considerable I'd the to question, have we in

kind your Just strategy that it acquisitions, maybe what here, you at your allocation look of pretty invest from to keep do do defensive, plans? you in are capital

John Wobensmith

we Look, market profile. again, will it's position, have I improving only low -- but sizable on fact And here. tap that can cash the the not will it's be also leverage also you what believe we be an think a from

for transaction, with finding exception now. or right I we've you We're right three now us program. transformative, sheet vessel of something, too It's, would balance As more as say, well know, interested before, the because take purchases don't though, I two strength the said the can the of right looking some see renewal time. fleet of the in

a So -- but focus. is it

Max Yaras

reflective is movement the asset weakness near-term the think you still do down? or values And today more Okay. there weakness current are expected of or

John Wobensmith

I don't think lot seen Capesize. there's the We larger in too of sales ships, the movement haven't in clearly much more down. a

of you fairly think lot but theoretical, a are today, a to would also I seen the movement. we've around where lot down tell of the -- end probably from of we seen maybe year we X% a tick just It's haven't I that's because of a lot.

is much my we again, what XXXXs to prices particularly we certainly down said, part the newer fuel-efficient, we'll move of small get as more recovery newer rates reversion the up, believe I older ships ships, the closer that value, of the to that's start well as guess a are like ships, I to IMO we've year. movement in as latter towards scrap see seen the as, ships XXXX a a think on expect you've very seen in and the where I whereas built

Max Yaras

tariffs makes U.S. all Okay, very but then early. know details, higher on think mean explain trade? or obviously would And of sense. it's implications about can don't your of We the the from the kind you what

John Wobensmith

affects we don't are the mean it right. directly drybulk we where soybeans, I I know think with trade.

that So a almost with year. -- -- from step certainly this earlier is issue, saw for because that typical year, selling to year corn of they is last We business of doing last the to by soybeans XX% rhetoric, is up standpoint, soybeans to tons. to very think drought year, what Argentinean that we But but this a under China expect soybean XX% is, from -- by a U.S. I be Last -- positive of slack, take least seen we've and they account tell what you, is million soybean of maybe at crop. year. for you export, slightly had exports. because little off, increased little last than of U.S. the the million tariffs, they maybe a exports round X less this healthy dealt USDA we year significantly a again would with impacted. But Brazil Brazil anyway, really guess export most going there soybeans. still no or strong I last over were tail X took is well need U.S. their the exports year, and some product very into have bit is year maybe higher numbers My went

obviously the -- will time look, tell. out. to see So, tariff issue sorted We like we'd

overall -- certainly X% on of the drybulk my was about equities, last year we're is I again, think the it's probably because maybe talking were by guess affected not the weighing we trade tariffs. about warranted, talking --

Max Yaras

it Got

Operator

the [Operator Instructions] Our James Jang Maxim next question Group. comes with from

James Jang

of bleeding Vale as well? asked. So a into second you do to been is lead doing follow-ups. that I lot anticipate One into have the questions incident third But quarter. probably is have the the two quarter

John Wobensmith

get as this bleeding it a ramp-up both I we expect I do be it's I but if going into half, just expect second know ramp-up in. say don't to slow the year, normalized would I that a, from a Vale year, towards I as a recovery we next a not I seasonal in pure get numbers, a also from that to then may And into but running shipments year. quicker expect we next but standpoint, get much standpoint. expect

James Jang

with ago Okay. the possible Singapore. know And about any tenders our meeting heard to sources in we weeks so from also VLOCs? that X about rumbling industry like, in Vale the was replace Polaris Have you

John Wobensmith

and not we've on this happened clearly the has that though, VLOCs have some heard increased scrapping, No, year seen that, scrapping Capes. the

in I year. had of think already size, it's those last interesting we've year of scrapped that ships, plus terms we XX had mean XX Capesize this scrapped I and plus

trend. a So positive that's

I I more you on of think enough you're heard I see anything [indiscernible]. have Vale to tell no, specifically going can't that. that But

James Jang

guys know question, vessels looked the tanker last you And opportunistically look I targets. good those quality then looking, acquisition you you Have I for be that Tonga would Capesizes? vessels consider? mean, were you might guys at if

John Wobensmith

sorry, am I one? which

James Jang

insolvent the Korean three The right Capes? Tonga tanker, company now, have they that's

John Wobensmith

Okay. fleet ships our Ultramax that to sector sector and looked those the hasn't would composition, changed. at of I in the barbell you, the approach Capesize I overall, specifically. tell growing strategy haven't our and

Operator

B with Our FBR. from next question comes Burke Riley Liam

Liam Burke

transformative have those how acquisition do or you're transformative talking on acquisitions? back assets. to your at re-weighting that you about disciplined opportunistic mentioned, a going assets the fleet also of transformative, look you a portfolio When be approach you John, would

John Wobensmith

it's think, transaction. look, think pull, the again, lever finding a of to right I matter I right the

not on the, of that obviously clearly way been may I think the we difficult, specifics set up, with we have or into are Going may in is look the but a has position strength. what Company like

more approach, just not just, important the to average, positioned. from Capes, cash where ships, right again, sized would not this make I something, higher jump but just, Company medium the of strong not with well and the we've strategy steadier look, beta tell to got overall Company the and upside position, but the below at cash flows it's I the and to very on move is you barbell find, think the the I the think to

Liam Burke

using Okay. lower and And wait tanker made the the you see the side there is commitment or product on on sulfur that or any on just fleet of scrubbers, have is thought the just fuel?

John Wobensmith

if Well, to -- product referring we don't have are tankers, you the the, on any but

Liam Burke

sorry, I'm smaller vessels.

John Wobensmith

to annual the Handysize, is scrubbers as no, now, XX% XX intention on fuel hedges of right that and XX% the fuel burn of on the the Capes to and put part our Yeah, just it compliant we point, about fleet. our a that stands Ultramax that are installing consumption. to Yeah, fine

Operator

a nice you. this day. Trading Conference Limited questions. further there you no Genco & are call. time Thank This have and At concludes the Shipping Thank

You disconnect. now may

Genco Shipping & Trading Limited (GNK) 10 May 192019 Q1 Earnings call transcript