Golden Ocean slows in Q2

The steep drop between the two periods is due to a $30m settlement the company received in Q2 2013 relating to non-performance on a 10-year charter.

First half profit was $11m on $140.9m revenues, down from a $50.2m profit on lower revenues of $128m in H1 2013 when the $30m settlement was recorded.

Golden Ocean also received a $5.3m refund relating to the default on a charter contract for one of its vessels during Q2 2013, and a $10.5m one-off gain on the revaluation of refundable installments on newbuildings relating to cancelled orders at Zhoushan Jinhaiwan Shipyard.

In all, Golden Ocean cancelled nine newbuilding contracts at the Chinese yard, and is currently undergoing arbitration to settle refunds. The company received refunds and interest of $56.2m in the second quarter, and a further $47.4m in July which covered three of the contracts. Preliminary awards have been granted for the remaining six contracts, with two of those awards not including interest. Both parties are appealing the awards, but Golden Ocean is confident it will receive refunds to cover the $90.8m it has paid towards the last six ships.

In May the company announced it was seeking delisting from the Singapore stock exchange, citing limited liquidity and relatively high cost as the motivation behind the move.

Increased use of hydropower and natural gas in China has caused a drop in bauxite and coal imports, leaving panamaxes out of work and putting pressure on the capesize sector. Despite this pressure and a moderate grain season in South America which failed to occupy smaller vessels, the capesize sector's primary interest, the Iron ore trade, was strong.

Chinese Iron ore imports of 457m mt in the first half was a 19% year-on-year increase. Expansion of Brazilian export capacity should have a positive impact on the freight market with increase ton-mile demand, and a drop in the price of ore internationally continues to support imports as opposed to Chinese domestic supply, which is increasing in cost.

Capesize vessels earned $11,900 per day on average in Q2, down significantly from the $16,300 per day earned in the first quarter. Golden Ocean intends to keep its ships trading in the spot market, awaiting an increase in long term rates. It had expected a stronger market for the second quarter, but maintains that the market will improve towards the end of the year.

Golden Ocean's board expects a small loss for the third quarter.