Knightsbridge awaits upturn

Wall Street’s largest capesize owner expressed surprise at the delayed arrival of a market recovery as it reported a second quarter profit today.

Knightsbridge Tankers says it had expected the depressed conditions to give way to higher earnings by now.

It says the sustained low rates are disappointing but retains confidence of a stronger fourth quarter.

Knightsbridge said: “The second quarter took the dry bulk industry by surprise. It did not live up to expectations forecast by most analysts following the sector.

“Capesize vessels earned on average $11,900 per day compared to $16,300 per day the previous quarter, but still almost twice as much as the same quarter in 2013.”

It notes Chinese steel production was up by 6% in the first half this year and analysts’ fleet growth assumptions have been accurate. This means the disappointing earnings must have been influenced by external factors, it says.

Knightsbridge believes weak coal and bauxite shipments to China has seen panamaxes compete with capes.

Coal demand from China has also lagged expectations, while the Indonesian export ban and the moderate South American grain season also passed up the line to the capesize market.

Knightsbridge, which has 39 capesizes on its books including newbuildings, logged a profit of $6.3m in the second quarter, overturning a small loss a year ago.

Its sums include a $3.2m gain following the partial settlement of a charter dispute.

Adjusted core operating profit of $4.6m compared with the $6.7m consensus.

Knightsbridge, now the listed capesize arm of John Fredriksen’s Frontline 2012, has been tipped to merge with sibling Golden Ocean.

It made no mention of the proposed union in its quarterly report.