Earnings call transcript: Pacific Basin’s Q3 2025 highlights fleet strategy

Pacific Basin Shipping Ltd (2343), with a market capitalization of $1.71 billion, reported its Q3 2025 earnings, showing mixed performance across its fleet operations. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value assessment. The company revealed a strategic focus on fleet expansion and innovation, despite facing challenges in market rates and certain bulk commodities. The stock saw a modest increase of 1.17%, closing at $2.56, trading near its 52-week high with an impressive 58% gain over the past six months.

Key Takeaways

• Pacific Basin’s Handysize TCE earnings fell 15% year-over-year.
• Supramax TCE earnings rose 10% year-over-year.
• The company is expanding its Singapore operations and fleet renewal strategy.
• Positive outlook on dry bulk market with expected minor bulk demand growth.

Company Performance

Pacific Basin navigated a challenging Q3 2025, with mixed results in its core business segments. Operating with a moderate debt-to-equity ratio of 0.17 and a healthy current ratio of 1.48, the company maintains strong financial flexibility. The Handysize segment experienced a decline in time charter equivalent (TCE) earnings, dropping 15% year-over-year to $11,680 per day. Conversely, the Supramax segment saw a 10% increase in TCE earnings, reaching $13,410 per day. These results highlight the company’s ability to leverage its Supramax fleet amidst fluctuating market conditions, though InvestingPro data indicates the company faces challenges with a relatively low gross profit margin of 4.5%.

Financial Highlights

• Handysize TCE earnings: $11,680 (-15% YoY)
• Supramax TCE earnings: $13,410 (+10% YoY)
• Market spot rates: Handysize $11,600 (-1% YoY), Supramax $14,300 (+4% YoY)

Outlook & Guidance

Looking ahead, Pacific Basin maintains a positive outlook on the dry bulk market, anticipating steady growth in minor bulk demand. InvestingPro has identified several key trends, including strong returns over the last three months and five years, though analysts anticipate a sales decline in the current year. The company foresees a potential structural undersupply in dry bulk shipping, which could favorably impact future earnings. The strategic focus remains on fleet renewal and expanding operations in Singapore, with new low-emission vessels scheduled for delivery from 2028. For deeper insights into Pacific Basin’s performance and prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 stocks with expert analysis and actionable intelligence.

Executive Commentary

CEO Martin Fragaard emphasized the company’s preparedness for ongoing macroeconomic and industry uncertainties, stating, "We are prepared for continuing general macroeconomic and industry uncertainty." He also highlighted favorable supply fundamentals, asserting, "Supply fundamentals are also favorable."

Risks and Challenges

• Geopolitical and trade disruptions could impact shipping routes and costs.
• Fluctuations in bulk commodity demand, particularly in grain and coal, present ongoing challenges.
• The potential for increased tariffs, especially concerning US-China trade, remains a concern.

Pacific Basin continues to navigate a complex shipping landscape, balancing strategic growth with market challenges. The company’s focus on innovation and operational expansion positions it to capitalize on future market opportunities.

Full transcript - Pacific Basin Shipping Ltd (2343) Q3 2025:

Conference Moderator: Welcome to today’s Pacific Basin twenty twenty five Third Quarter Trading Update Conference Call. I’m pleased to present the Chief Executive Officer, Mr. Martin Fragaard and Chief Financial Officer, Mr. Jimmy Ng. For the first part of this call, all participants will be in listen only mode.

And afterwards, there will be a question and answer session. Mr. Fragaard, please begin.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Thank you. Yes, and welcome, ladies and gentlemen. Thank you for attending Pacific Basin’s third quarter trading update call. My name is Martin Falko, CEO of Pacific Basin, and I’m joined by our CFO, Xiemi Ling. At this time, we are with you from our office in Sycamore.

Assuming you have already gone through the presentation, we will highlight key points discussed in it before we proceed to Q and A. I’ll first hand over to Jimmy for a quick overview of the third quarter performance and market review.

Jimmy Ng, Chief Financial Officer, Pacific Basin: Thank you, Martin. Good evening, ladies and gentlemen. I’ll share with you some observations on the market and a snapshot of our business performance for the third quarter. Please turn to Slide three. In the 2025, hand size and Supramax market freight rates showed good upward momentum post Chinese New Year, especially sharply in the Supramax segment.

Market spot rates for head size and Supramax vessels averaged about $11,600 and $14,300 net per day respectively, representing a decrease of 1% and an increase of 4% compared to the same period in 2024. The volume average exercise FSA for the remainder of 2025 is $13,019 net per day and the average Supramax FFA rate is $14,140 net per day. Please turn to slide four. In the first nine months of the year, global mined bulk loadings rose 4% compared to the same period last year, mainly driven by bauxite, fertilizers, mined ores and concentrates. Chinese steel exports were up 10% year to date as demand from emerging markets remain resilient.

Bauxite loadings from Guinea into China continued to be strong. If we exclude bauxite loadings, year on year growth of minor bulk would be around 3%. Grain loadings, on the other hand, decreased 9% year on year. Grain imports to China dropped by 15% on the back of China’s record high domestic harvest. China has switched soybean sourcing from US towards Brazil, at the same time reducing corn purchases.

Even so, US grain exports were up 12% year on year as they were biased in The Middle East, North Africa, Southeast Asia, and also Latin America. Next, if we look at coal, coal earnings reduced 6% year on year due to weaker demand from China, South Korea, Taiwan and India. China C1 coal imports fell by 15% because of higher stock levels, migration to renewables, as well as overland trade from Mongolia. The drop in imports to North Asia and India was partially offset by an increase in coal imports into other emerging Asian countries such as Bangladesh, Vietnam and Malaysia. Finally, on the rightmost column, iron ore loadings also dropped 3% year on year with bad weather impacting Australian imports in the first quarter as well as a reduction in the exports from India.

Although Australia has been trying to catch up with its targets in exports, Australian exports were still down 3% year on year. EMEA also saw exports dropping by 27% in the third quarter. Please turn to Slide five. Our core business generated average AE TCE earnings of $11,680 for Handysize and $13,410 for Supermans in the third quarter, representing a year on year decrease of 15% for handysize and an increase of 10% for Supramax. When comparing to the market, our average daily TCE earnings outperformed the BHI Handysize Index by $90 per day in the period, but we underperformed the BFS Supermax Index by $100 per day.

This was mainly because of the strong uptick in market rates in the third quarter, especially in Supramax sector. We typically underperform in fast rising freight markets due to the tight lag between spot market fixtures and voyage execution. However, when we compare our year to year performance with the market, of which our average handysize and Supramax TVE earnings have outperformed by $15.40 dollars and $19.60 dollars per day respectively. For the February, we have currently converted 7287% of our committed vessel days for our Handysize and Supramax cost at $12,380 and $14,060 per day respectively. In addition to our core business, our operating activity generates a daily average margin of $750 per day over six thousand eight hundred and thirty operating days in the third quarter.

Our operating activity complements our core business by matching our customers’ sports carloads with short term charter vessels, making a margin and contributing positively to our results throughout the cycle. I will now hand you back to Martin for market updates and strategy. Thank you. Please turn to Slide seven.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Looking at Clarksons latest forecast for 2025 and 2026, forecast coal and iron ore volume growth continued to be weak. On the other hand, minor bulk and grains are expected to see healthy growth going forward with especially bauxite, alumina, manganese ore and scrap steel growth anticipated to remain robust. As JP said, the decrease in coal volumes are mainly due to China, the world’s biggest coal consumer, already has stockpiled for energy security and is expected to source more coal over land from Mongolia. Soybean volumes are expected to be strong, with Brazil projected to achieve a record crop in 2025, while China continuing to reduce its reliance on imports. Overall, in the drybulk segment that we are focused on, trade volumes are expected to remain resilient.

Please turn to slide eight. According to Glycos Research, the combined global fleet of anti size and Supramax vessels is estimated to grow 4.3% in 2025 and three point nine percent in 2026. Newbuilding vessel deliveries account for 4.84.4% in the growth forecast, while scrapping is estimated to remain low with 0.40.5% for 2025 and 2026, respectively. The order book stands at 10.3% of the existing fleet, but new billing ordering dropped by a significant 76% year on year, given the concerns arising from the latest decarbonization rules and the ongoing uncertainties in respect to various port fees schemes. Meanwhile, the global fleet of handysize and supermax continues to age with nearly 40% of the ships being twenty years or older.

Minor bulk fleet supply passed peak growth in 2025 and with supply growth apparently manageable going forward, we remain positive about the lighter bond supplydemand outlook in the longer term. Please turn to slide 10. Vessel values have remained high since 2021 and we continue to maintain discipline in managing our fleet renewal. Our core fleet currently consists of 120 owned and long term chartered vessels. During the quarter, we sold one Supramax vessel and exercised the purchase option on one handysize vessel, which was delivered from our long term charter fleet into our owned fleet.

We exercised another purchase option on one Ultramax vessel that is yet to be delivered in the coming months. And we have also taken delivery of two long term charters Ultramax newbuildings of 64,000 debt rating. Looking ahead, we maintain fixed price purchase options on 13 long term chartered vessels and in addition, we will take delivery of one Ultramax and one Heavy Size long term chartered newbuildings during first half twenty twenty six. Our four low emission dual fuel methanol Ultramax newbuildings from Japan will be delivered 2028 onwards. Our focus is to strategically renew and grow our fleet and continue to expand our growth optionality.

Please turn to Slide 11. In preparation for the implementation of Newport tariffs, we have taken all required proactive steps within our control to protect our business and position Pacific Basin to continue serving our global customers freely and competitively across all state ports and countries, including China and The United States. This includes expanding our Singapore company structure, which holds our Singapore owned and frac vessels. We have already transferred several vessels under an initial plan to transfer about half of our own fleet to Singapore ownership and frac. In addition, responsibility for the company’s overall and ultimate such allowance, thirteenth of October, for the purpose of compliance with the regulations.

Pacific Basin is an independent publicly listed company with approximately 99% publicly traded shares with no controlling shareholder. As such, the company shares are traded freely every day and are broadly held by investors across the world. Based on public beneficial ownership reports filed with the Stock Exchange as of October 15, Page 25, the Citibank does not believe that 25% or more of its equity interest is held directly or indirectly by either U. S. Or Chinese entities or persons.

We do believe the special court fees under both The U. S. And Chinese schemes are not applicable to us. In an abundance of caution, we continue to work with our advisers to analyze the rules and their relations, while also engaging with authorities to clarify and mitigate any applicability or impact they may have on our company, our vessels and our operations. For further details, please refer to the third quarter trading update as published to the Stock Exchange website.

Please turn to Slide 12. Our commitment to returning value to shareholders remains intact. With respect to our share buyback program, we have so far used approximately $26,000,000 out of the announced $40,000,000 to buy back and cancel about $109,000,000 of the Celebration shares. That’s about 65% of the targeted share buyback program completed, and it is our intention to execute the remainder of the program within 2025. Please turn to Slide 13.

The drybulk market is firm and while seasonality as well as productivity and uncertainty due to shipping tariffs actions are to be expected, near term market conditions are expected to benefit from steady minor bond demand growth and likely increased supply disruption, which would support tighter freight market conditions going forward. Supply fundamentals are also favorable and overall the age profile of the global vita bulk fleet combined with limited newbuilding orders driven by industry uncertainties suggest a potential structurally undersupply in vita bulk shipping in the future. We are prepared for continuing general macroeconomic and industry uncertainty and volatility, remaining vigilant and nimble to safely navigate the challenges that arise and continue to capture opportunities along the way. Our financial strength, low cash breakeven level, agile business model, enhanced growth optionality and the experience of our global team position us very well on changing market conditions. We thank our customers, our shareholders and advisers for their ongoing loyal support to Pacific Basin.

And I also like to thank our skilled team of colleagues all over the world for their dedicated efforts and hard work dealing with multiple complex external challenges during the year. That concludes our twenty twenty five first quarter trading update presentation. I will now hand over the call to our operators. Operator, Q and A. Thank you.

Conference Moderator: We will now begin our question and answer session. If you have a question for today’s speakers, please join the Zoom link via the blue Ask a Question button. Press the raise hand button, and you will enter a queue. After you are announced, please unmute yourself, state your name and company, and ask your question. If you find that your question has been answered before it is your turn to speak, please press the lower hand button to leave the queue.

You may also type your questions in the Q and A box. Our first question is from Farash Jain. Please unmute yourself and begin with your question.

Parash Jain, Analyst: Thank you, Martin and Jimmy, and congratulation on a good set of data. I would appreciate if you can talk a bit more on on the congestion and the disruption related to the port fatality retardant. And help us clarify again, is is the headquarter being in Hong Kong does not qualify to be to be a Chinese corporate? And what measures we have done with respect to this piece and flag to Singapore? And hypothetically, if that app has to be attractive, if you can share your exposure to to The US market as we speak.

Thank you so much.

Martin Fragaard, Chief Executive Officer, Pacific Basin: I didn’t get the first question. The More

Parash Jain, Analyst: and more, with respect to congestion, where are we which pockets where we are seeing congestion? And particularly because of this retaliatory port tariffs, how your peers who are affected by this are coping? And is that creating a congestion?

Jimmy Ng, Chief Financial Officer, Pacific Basin: I don’t know if it’s creating congestion.

Martin Fragaard, Chief Executive Officer, Pacific Basin: I think what we’ve seen so far, especially here in the third quarter, of course, that everybody has probably stepped back a little bit from calling The US, trying to think out exactly what would happen. So when you look at the market, the market has actually been, since the summer, has actually just improved quite a lot and of course again creates some volatility in the market. In respect to our headquarter, funny way. We are saying that our strategic leadership and also ultimate commercial management or decision making, that is now in Singapore, and that’s the definition of of of your main office or your your headquarter. So that has also changed.

Fair enough. And in respect to the last part about was that about the exposure to The US? So we what is October, it’s only a few days ago, but of course The US has always been about 10% of our business. We are trading both China and The US still and have ships calling both places. We have, you know, have done a lot of work the last five to six months and yes, so many others have also scaled down a little bit on our US trading but have been focusing mainly on servicing our long established customers in the area you know, waiting a bit to see how the rules would be implemented.

Parash Jain, Analyst: Okay. And Martin, maybe I’ll take an opportunity to ask one follow-up question. Given the IMO meeting is ongoing in London, what is your expectation? And if it goes through as per plan, what would it do due to the supply dynamics come 2027 for the sector? Presumably, it will be quite beneficial, but I’d like to hear your thoughts.

Martin Fragaard, Chief Executive Officer, Pacific Basin: First of all, think predicting what’s going to happen at the IPO meeting, that is probably a little bit too much for me to do.

Parash Jain, Analyst: Two outcome, right? Yes or no?

Jimmy Ng, Chief Financial Officer, Pacific Basin: Yeah. I think,

Martin Fragaard, Chief Executive Officer, Pacific Basin: Patricia, I think there’s more maybe three major things are just being postponed. That is not the first time that is happening. But I I think our wish and our hope is, of course, we will be proud if shipping could be the first move, like, in in respect to have a regulation of decarbonization. That I think will will that’s what that’s our hope that that is, of course and that the rules are being rectified. I think that would be a be a good thing.

And, of course, it it will be supported to the new buildings that we have in Japan and the things we have been doing the last couple of years. And of course, it would also start supporting a little bit the green fuels and also supporting that we have to get different ships into our fleet over time. So I think if if they were rectified, so it would be good for the climate, it would be good for our business, and of course, also good for new business.

Parash Jain, Analyst: Lovely. Thank you so much, and I’ll go get back in the queue.

Conference Moderator: The next question is from Tian Nai Fan. Please unmute yourself. Question. Please limit

Tian Nai Fan/Chien Lei, Analyst: Martin. Hi, Jimmy. Thank you for taking my question. I think I’ll ask a follow-up question following Parash’s questions. I think his first question was about the potential disruptions from China’s port tariffs towards U.

S.-linked vessels. We heard from like some media reports that there are some vessels already on the sea, but after China announced the new regulation or new port fees, actually those vessels are now waiting outside Chinese ports to clarify whether they need to pay for the port fee or they want to do some like unloading in nearby countries and then transship cargo to China. Have you seen any of these kind of thing happening in the market? Do you think that could lead to some disruptions to the overall like trade flow and the vessel like effective supply? So this is the first question.

The second question is about The U. S. Holding. I think on Bloomberg, have categorized like your share stakes by like stakeholders’ nationality. I think that data shows you have like more than 50% of shares held by U.

S. Investors. So just want to double confirm when you said your U. S. Holding is below 25%.

Did you take into consideration of those like secondary market investors who might be U. S. Investors? And also want to confirm, mean, if there are like more than 25% of U. S.

Investors, I think you can get exemption from China as long as you use like Chinese built vessels to ship cargo to China. Is that right?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yeah, so first question in respect to disruption and of course the China implemented similar rules as The U. S. Think we’ve been so busy following up on our own thing and making sure we are ready for that. So I think there’s a lot of rumors going on at the moment, but I have not follow-up on it, and I do not know about transshipment and these things. But there’s no doubt, of course, that all these things have created some concerns, only in our business, we all hold back a little bit, I’m sure some people have stopped the shift until they understand exactly how the rules are to be understood.

So of course, this creates disruption and inefficiencies, and that is, of course, normally very good for our markets. So I think it will have a positive impact on the market depending on the overall outcome of all these things. And yes, the last question you asked, it’s also correct that Chinese steel ships seems to be able to call China without any tariffs. I think that has been confirmed. In respect to The U.

S. Holding, we’ve seen different media and others quoting shareholding in Pacific Basin. And I think it’s important for us to say that our shares are hold by custodians and funds and other investment vehicles. Don’t think we do not have access to know who the ultimate orders are of our shares. And I don’t think anybody else has that.

And that is the case that we presented, and that is also what we see others in similar situations the market is saying. So I don’t think it’s possible for anybody to predict or say what our shareholding is on that side. We and ourselves have looked at it and, course, if anybody has shareholding above 5%, they would have to that’s what I think it’s called public beneficial ownership. They have to report to the stock exchange, the ownership side of it. Look at all these things and we have concluded that as we see it, we do not believe we have anybody above 25% by the Chinese or U.

S.

Tian Nai Fan/Chien Lei, Analyst: Got it. So may I follow-up question? On So do you have enough Chinese built vessels in case that you’re like viewed as a company like over 25% held by The U. S.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Do, of course, also have Chinese. I think we have 70% Japanese business, 30% Chinese business. But our ambition is still the way we look at it is to be able to trade freely globally to service our customers. So depending on how the rules are, whether the rules are changed, we will, of course, be waiting for that as we always are. But at the moment we are trading our ships weekly both in China and The US.

Tian Nai Fan/Chien Lei, Analyst: Last question, so your China exposure is also roughly 10%,

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yeah. If you look at last year’s training, volume wise, I think it’s volume we calculated, it’s 10% US and similar similar in Jan.

Tian Nai Fan/Chien Lei, Analyst: Got it. Thank you. Thank you very much. I’ll be go back to the queue.

Conference Moderator: Just a reminder, if you have a question, please join the Zoom link via the blue Ask a Question button. Press the raise hand button, and you will enter the queue. You may also type your questions in the Q and A box. There are currently no questions.

Unidentified Portal Question Presenter: So there are some questions through portal. So this question is about the Red Sea opening. So the question is, is Red Sea open now? Is Pacific Basin able to transit? And will the market drop when the Red Sea area is back to normal?

Martin Fragaard, Chief Executive Officer, Pacific Basin: We are of course following the situation and I think it’s still fairly new. One thing we look at as an indicator is the insurance prices and at least up to early today, was not informed that there would be any reduction in the insurance premium to transit the Red Sea. And I think it will take some time. I think everyone just wants to see that it’s in a stable situation and I think the first indicator is that you see insurance premium coming down. I think we said all along that it has an impact, of course, on the supply part, but for minor bulk, for the smaller ships maybe less than for the bigger ones and probably less than for other segments like containers and others.

But it’s clear that if the Red Sea opens up, we will create more supply in the market. But with the number of disruptors we see at the moment, I’m sure something else will happen, but also something else that has already happened that will take that over. We’re not so worried about that part of it. And we also just like to see the handbags that they’ve done about attack on ships not so long ago. I think it would take a little bit of time before things are opening up again, but let’s see.

Conference Moderator: The next question is from Chien Lei from. Please unmute yourself and begin with your question.

Tian Nai Fan/Chien Lei, Analyst: Hi. I think maybe if there are not too many people in the queue, maybe I can ask another two questions. So I think the spot market of Handy, size and Supramax has been like much stronger than expected since the quarter to date. What’s the reason? I mean, what’s driving that rally?

And also going forward, if we look at like normal seasonality or also taking into consideration of what’s driving the third quarter to date rally, what’s the outlook for the rest of the year? And the second question is about outperformance. So I think we have some like underperformance in Supramax in the third quarter of this year. The outperformance for Handysize remained positive, but slightly narrowed. What’s our outlook for our outperformance in the fourth quarter of this year?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yes. Good questions. Thank you for those. First of all, the market, of course, from my level of segments being, demand has actually been positive. We see still a lot of steel out of China and a lot of activity around.

Growth has not been as high as the new supply. And I think early in year we were a little bit nervous about that part of it. But what we’ve seen during the year on top of actually some positive demand growth even though it hasn’t been as high as a new supply. What we’ve seen is all these disruptors. They just keep coming and impacting the market and I think that is part of it.

So I think the conclusion is that this continues and if you have 1% growth in demand, you definitely need more than 1% growth in supply to cover that. And I think that’s probably a trend we will see going forward. I think the outlook wise, first of all, think we are probably getting a little bit more optimistic about the world economy. Things look maybe a little bit better than we did earlier in the year.

Jimmy Ng, Chief Financial Officer, Pacific Basin: Top of that, I

Martin Fragaard, Chief Executive Officer, Pacific Basin: think for the short term, when I talk to the commercial team, the commercial team we have there, I think they’re quite optimistic about the market for the rest of the year. And of course, everybody expects there will be the normal seasonality leading up to Chinese New Year when we get into the New Year. Demand for some of the Vinyl Bolt segment looks fine actually. And you can say this year has peaked, new supply has peaked this year and will be lower next year. So I think fundamentally there’s some positive things in the market.

But I think we still need these disruptors or these multiple disruptors in the market. But so far, the last couple of years, we have had plenty of those, it’s hard to see a world where they will not continue at the moment. In respect to outperformance, I think as Jimmy said earlier, quite normal that in a market that goes up, we will always sort of run after the market. And what you see this time, especially on the ultras, is that the market in July actually went up at about 50%. Of course, we fixed our shifts forward a month or two, so there will be a delay in that.

Very naturally, especially when it increases so fast and so much, we would always call it underperform. But I think we are running after and trailing the market. I usually say to my colleagues, will defend anything to the market and to the investors if the market continues to go up, that we are not performing or not outperforming a lot. But normally, when the markets shift again, then of course we catch up with the market and we start to outperform again. So so the answer is, I think, when you look at the outperforming the the last nine months or the last twelve months, it’s it’s it’s it’s a solid outperformance, and and let’s see what the market is is doing.

I think we will continue to do our outperforming outperforms going forward. I hope that answered the question.

Tian Nai Fan/Chien Lei, Analyst: Yes, indeed. May I clarify, you said when there is 1% growth in demand, there is more than 1% like need of vessels. What’s the reason behind that?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Think, well, are many things, but one thing is, of course, that the speeds of the ships has increased. This year compared to last year’s same period, the speed of the ships is down 2%. Since 2021, the speed of the ships the average speed of the ship is down 6%. And every year since 2021, speed has reduced every year. So I think that is one reason for us that you need more supply to compensate for that part.

And then on top of it, you have the disruptors. And then, of course, we have to start with maybe trade the ships differently, maybe more grain out of Brazil than The US Gulf. People have to call some ships can call US, others cannot. So the efficient supply chains, are broken and therefore, you know, we probably have to save a little bit longer. And that, of course, takes supply out of the market.

And that is if it’s not the Red Sea or Panama Canal or different wars or congestion on our tariffs. There’s plenty of those who would take supply out of the market because of inefficiencies.

Tian Nai Fan/Chien Lei, Analyst: Got Got that. So do you think the vessel speed decrease has is mainly because environmental, like, policy requirements or it’s because of some other reasons?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yeah. Think that is definitely because of the decarbonization and the regulation. Also, disruption has also been we have had a lot of ships in dry dock actually, more than normal. That’s a product that takes supply out. And also many ships, of course, the rules have equipped their ships with this power limitation devices.

The idea is that that has reduced the speed of the ships when they come out due to spot compliance with the regulation. So it’s actually true that, yes, that has happened because when you look at the freight rates, and actually the oil price is actually coming down somewhat. So the logic would, of course, be in a good market with a lower oil price, we would speed up. That just makes economic sense. But that is not happening to the extent that so that has to be the cause of the decarbonization and the advantages.

Tian Nai Fan/Chien Lei, Analyst: Thanks. So you mentioned more ships in the dry docks. It’s also because of the regulations?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Under regulations, but also partly I think because a number of ships were built at the same time back in probably 2016 or earlier. It’s just a timing thing on that.

Tian Nai Fan/Chien Lei, Analyst: So you mean that’s because of the overall global fleet has been aging?

Martin Fragaard, Chief Executive Officer, Pacific Basin: No. It’s actually more like four because every ship has to go to dock with a certain interval. If you have one year in the past where many ships have been in the same period, many ships have to go and drive out at the same period here, so it’s just particularly 10 k.

Tian Nai Fan/Chien Lei, Analyst: Got it. Got it. It’s very clear. Thank you very much.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Thank you.

Conference Moderator: The next question is from Parash Jain. Please unmute yourself and begin with your question.

Parash Jain, Analyst: Martin, could you also remind us on your CapEx plan for this year, potentially next year? But more importantly, with the improved rates and probably shipyards opening up the capacity for 2019 onward and probably container rolls over. Do you see the dry bulk operators get back to the new build market? Or you think that even despite the improved rate, the returns are not justified to see a surge in new order? Thank you.

Jimmy Ng, Chief Financial Officer, Pacific Basin: Yes. So, Praj, I’ll probably answer the CapEx question first. Typically, our CapEx, we will have certain dry bulk expenditures. And as you know, we we also look at the number of our purchase options to see if there is a potential exercise. Then in terms of, you know, our cash usage, we also will use some of our cash for share buyback.

We covered in the presentation that we set out to do US40 million dollars this year. We have completed US26 million dollars So there’s a remaining US40 million dollars that we would aim to complete this year. So that’s our basic use of cash. Now, of course, we will will maintain and keep an eye on the secondhand market and also any opportunities to see if there are opportunities for us. But as we said in the presentation, the secondhand market currently, the way we see it is still at an unfiltered level.

So that is something that we need to bear in mind as well. So that’s on the CapEx side.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yeah. And it’s back to to the and new building secondhand prices and so on. Look. It’s a what we see right now is, of course, that the secondhand are not a cause, but hand price is actually coming up, and I think that is, of course, partly an impact on the spot market. And I think people have a little bit more positive view on the future of the market.

Of course, the rates at the moment, they are getting close to being able to justify buying a secondhand ship, but I think there’s still a little bit of a gap in it, and we have to see how sustainable the rates are. But I think overall, people are getting a little bit more positive about the the the outlook. The new buildings if you want a new building today, you probably have to say 2028, and I also hear somebody say 2029. But probably in 2028 you can still get new buildings in the minor bulk segment. Prices have come down somewhat, not a lot, but they have come down the last year.

China has seen steel prices have been low in China and that gives China benefit compared to Japan on steel costs and therefore they can probably be more competitive on the pricing. As we all said earlier, the new ordering is down quite a bit compared to last year. I think it’s clear that the market, many of the owners and players in the market has good balance sheets and and similar to us, they want to, of course, grow the business, so let’s see what happens. I think we’re all sitting waiting a little bit for the IMO to make up or hopefully deliver on the decarbonization part. There will also guide us a little bit on how to do it.

And also, it is important to say that the yard capacity, also because of minor, also because of the feeder container ships and so on, which is actually the same size as our ships. Many of the yards would prefer to build those ships. Think the margins they may spend on those kinds of ships than our ships. So there is pressure on the capacity at the yards. So I think in some ways we sort of always say we are very disciplined in buying and selling ships, but we also, of course, like to grow.

But on the other hand, we have a cold fleet of 120 ships, and increase the high asset prices is also good for us. I think what is positive for us at the moment is of course also that our gap between fair market value and our share price is also closed quite a bit. We are probably in a position where we have a nice balance sheet, we have a good share price or better share price at least. We have the LED ships coming in the new buildings that decide we know, We are waiting for IMO, and then, of course, we have to see what we do and what the share prices are doing. I hope that answered the question, Prash.

Parash Jain, Analyst: Yes. Thank you so much. And have a good day.

Conference Moderator: There are currently no questions.

Unidentified Portal Question Presenter: Okay. There’s one more question. It’s on the portal. May I know if The US and China port fees, is it positive or negative effect to the shifting rate and potential company earning impact?

Martin Fragaard, Chief Executive Officer, Pacific Basin: Think that’s the short term because it does create disruption or this disruption. Then of course it will have a positive impact on the market. I think everybody, including ourselves, we have also asked both in The U. S. And China for clarification on some of the regulation.

We’ve been totally transparent with both the challenges we have in reading the agreements and we’ve been seeking advice on different things. So there’s of course a lot of uncertainty in the market at the moment that of course creates this disruption and that is definitely good for the market and that’s usually how it works in shipping. In the longer run, I have to say we hope that we are transporting, we are living off global trade, so of course we have to hope that it doesn’t take over and has a negative impact on the global trade, and it’s for sure, but but in the short term, it’s definitely a positive for our market.

Conference Moderator: Just a reminder, if you have a question, please join the Zoom link via the blue ask a question button. Press the raise hand button, and you will enter a queue. You may also type your questions in the q and a box. As there are no further questions, we will now begin closing remarks. Please go ahead, mister Martin Vergard.

Martin Fragaard, Chief Executive Officer, Pacific Basin: Yeah. Again, I’d like to thank you again for joining us today and for your continued support to Pacific Basin. If you have further questions, please contact Kung Le Fong of our Investor Relations department. Have a great evening, and thank you again.

Conference Moderator: This concludes our conference call. Thank you

Martin Fragaard, Chief Executive Officer, Pacific Basin: for

Jimmy Ng, Chief Financial Officer, Pacific Basin: all the

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