Carrier

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Submitted By hatefinance
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The

. What are the major determinants the daily hire rates for capesize vessels?
Daily hire rates are determined by supply and demand.
Future supply = current vessel + new ships delivered - scrapings and sinking
The increase in size and efficiency the newer ships offered decreases the number of newer ships needed.
Demand for dry bulk capesize is determined by world economy, especially its basic industries such as iron ore and coal, as well as changes in trade pattern. Production and demand for these products increased in a strong economy.
2. How would you characterize the long-term prospects of the capesize dry bulk industry? Growing? Shrinking? Why?
The long-term prospects of the capsize bulk industry is expected to grow. Over 85% of the cargo carried by capesizes was iron ore and coals. Also, Australian production in iron ore was expected to be strong and Indian iron ore exports expected to take off in the next few years. Considering a favorable forecast of production in Australia and India, we should expect the same favorable forecast of demand on vessels service over the long run.
3. Do you expect daily spot hire rates to increase or decrease next year? Why?
Spot rate is expected to fall in 2001 and 2002, because 63 new vessels were scheduled for delivery in 2001 and that imports of iron ore and coal would probably remain stagnant over the two years. Another important fact is that old vessels accounts for a small percentage of the existing vessels and there won’t be a significant reduction in supply due to scraping of old vessels.
4. Show the Free cash flow from operating the new capsize vessel in the first five years.
Please refer to the Table 1 below, which shows the free cash flows from operating the new capesize of US firm and HK firm in the first five years.
Key Assumptions:
1) The Special Survey capital expenditures were depreciated on a…...

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