Welcome to today's Pacific Basin 2024 first-quarter trading update conference call. I'm pleased to present Chief Executive Officer Mr. Martin Fruergaard and Chief Financial Officer Mr. Michael Jørgensen. 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. Fruergaard, please begin.
Yeah, thank you very much. Welcome, ladies and gentlemen, and thank you for attending Pacific Basin's first-quarter trading update call. As said, my name is Martin Fruergaard, CEO of Pacific Basin, and I'm pleased to have our CFO, Michael Jørgensen, with me today. Assuming that you have already gone through the presentation, I will briefly highlight some of the key points discussed in it before we proceed with the Q&A session. Please turn to slide three. We are delighted to commence our call highlighting our recent announcement that Pacific Basin is ready to initiate its first-ever share buyback program based on approval of our share buyback mandate by our shareholders at the upcoming 2024 annual general meeting, which will take place tomorrow. This program, with an allocation of up to $40 million, is scheduled to run from the 25th of April until the 31st of December 2024.
We intend to cancel all shares that we repurchased, thereby improving the value of our remaining shareholders. The board's decision demonstrates confidence held in the company's future and the long-term prospects of dry bulk demand. This share buyback should also demonstrate our alignment with shareholders in our belief that our current share price does not fully reflect the intrinsic value of the company. This share buyback is another way that we continue to reward shareholders alongside our track record of returning cash to shareholders through dividends rate levels, which we are committed to returning to shareholders as part of our distribution policy. Our distribution policy is to pay out at least 50% of our annual net profits in dividends with any additional distribution in the form of special dividends and/or share buybacks.
A reminder that our ex-dividend date is 25th of April 2024, with payment of our final dividend for the 2023 annual result being on 9th of May 2024. Please turn to slide 4. During the first quarter of 2024, Handysize Supramax market freight rates were above historical average for this time of the year, excluding exceptional years of 2021 and 2022. This was due to manageable fleet growth, higher dry bulk loadings, and the ongoing disruptions in the Red Sea and Panama Canal, which are causing reduced fleet efficiency and longer voyages. Market spot rates for Handysize Supramax vessels averaged 10,510 and 12,310 net per day, respectively, representing an increase of 26% and 27%, respectively, compared to the same period in 2023.
Current forward freight agreements, commonly referred to as FFAs, for the second half of the year continue to be at a premium to current spot freight rates across all dry bulk segments, reflecting market expectation of stronger demand fundamentals. As of 12th of April, rates quoted by the Baltic Exchange for Q3 2024 and Q4 2024 are 12,050 and 11,760 net per day, and 14,340 and 13,950 net per day for Handysize Supramax, respectively. Please turn to slide five. Global minor bulk loadings were approximately 3% higher in the first quarter due to increased loadings of bauxite and salt, while cement and clinker, ores and concentrate, and also fertilizers were all largest detractors.
We anticipate minor bulk demands to benefit from increased seasonal demand while improvement in economic activity within the United States, coupled with China's supportive policies aimed at bolstering manufacturing infrastructure investment, and particularly in residential housing construction, signals promising growth potential. In the first quarter, global iron ore loadings saw a 2% rise, largely attributed to a record first quarter of iron ore loadings from Brazil, which experienced a 50% increase compared to the same period last year. This significant growth was the result of efforts to reduce the effects of rainfall on the extraction, processing, and transportation of iron ore. Despite lower domestic housing construction, China's steel industry remained robust, fueled by varied demand from sectors including motor vehicles, manufacturing, shipbuilding, infrastructure development, and also power generation. Excess steel not used domestically is mainly exported by Supramax vessels to Southeast Asia.
Chinese steel production saw a 22% decrease, yet export surged by 31% in the first quarter of 2024 compared to the previous year. A 1% decrease in global coal loadings in the first quarter of 2024 is attributed to the reduced loadings from Russia due to import levies aimed at protecting Chinese domestic producers, and from Indonesia with producers facing additional tariffs on coal shipments. China's demand for imported coal remained robust, driven by limited hydroelectric power generation and energy security concerns, even with high domestic coal production. Meanwhile, India's coal import rose by 5% year-on-year, fueled by strong economic growth and rising electricity needs. In the first quarter of 2024, global grain loadings increased by 1% compared to the same period in 2023. This decrease can be attributed to increased loadings of grains from Argentina, Ukraine, and the United States.
Strong global grain production in 2023, along with optimistic forecasts for 2024 grain harvest in countries including Argentina, Australia, and Russia, is expected to result in surplus grain availability. The grain export season in South America, which began in March, is expected to result in significant grain loading volume from Brazil in the second quarter, with Argentina also expected to recover from its 2023 drought-induced low outputs. Meanwhile, Ukraine has seen a 33% increase in grain shipments compared to 2023, thanks to improved export capabilities. Despite this growth, current Ukraine grain loadings volume still lagged 7% behind the pre-conflict levels of 2021. Please turn to slide six. Our core business generated average Handysize Supramax daily TC earnings of $11,050 and $13,610 per day, respectively, in the first quarter of 2024. This represents a year-on-year decrease of 18% for Handysize and no change for Supramax.
For the second quarter of 2024, we have covered 84% and 96% of our core committed vessel days at 12,219 and 14,610 per day for Handysize Supramax, respectively. For the second half of 2024, we have covered 36% and 47% of our core vessel days at 9,280 and 11,840 per day for Handysize Supramax, respectively. Cargo cover rates exclude scrubber benefits and operating activity. Current value of scrubber benefits are approximately $70 and $1,500 per day across our core Handysize and Supramax fleet, respectively. We currently have a significant percentage of open days for the remainder of the year. We expect to benefit from higher market spot rates as seasonality improves commodity demand following the end of the first quarter of 2024. Additionally, the limited transit of dry bulk vessels through the Suez Canal and the Panama Canal should support tonne-mile demand and, in turn, freight rates.
Our core business, with substantially fixed costs, is the main driver of our profitability, with an approximately cash break-even level, including general and administrative overheads, for Handysize Supramax vessels of 5,960 and 6,120 per day, respectively, in 2023. Please turn to slide seven. Our Handysize Supramax TC earnings outperformed the spot market indices by 540 per day and 1,300 per day, respectively, in the first quarter. Our outperformance in the first quarter of 2024 was negatively impacted by our proactive strategy to take cover. Historically, we have been proactive in taking short-term cover for the first quarter, which is typically a softer market during the Northern Hemisphere winter and Lunar New Year periods. Our outperformance continues to benefit from the scrubber installed across our core fleet of Handysize Supramax vessels, which have contributed $30 and $940 [in] 2024.
Our operating activity also contributed positively, generating a margin of $510 per day over 6,660 operating days in the first quarter of 2024, a decrease of 53% and an increase of 32% year-over-year, respectively. We currently operate approximately 169 short-term chartered vessels, with a focus to increase operating days and margins on a year-over-year basis. Our operating activities complement our core business by matching our customers' spot cargoes with short-term chartered vessels, making a margin and contributing to our result regardless of whether the market is weak or strong. Please turn to slide 12. We are actively monitoring the complex situation in the Red Sea and Gulf of Aden, which are concerns for maritime operations. Additionally, restrictions in the Panama Canal have forced us to reroute dry bulk vessels on longer journeys, increasing demand for tonne-mile.
To protect our crew and ships in the Red Sea, we are opting for the much longer route around Africa. Although the Panama Canal water level has improved, vessel transit restrictions are likely until the latter part of 2024, impacting supply and supporting freight rates. Please turn to slide 14. In 2023, we took delivery of 3 out of 11 new buildings that are part of our long-term time charter commitments, with the remaining eight vessels scheduled for delivery between now and the first quarter of 2026. We expect the delivery of the first of 4 chartered 40,000 DWT Handysize new buildings in May 2024, and we await the arrival of a chartered 64,000 DWT Ultramax new building in the fourth quarter of 2024. Our fleet is expanding with the addition of these larger and more efficient Handysize and Supramax new building vessels.
These long-term time chartered vessels have an earning capacity approximately 20% higher than our current average core Handysize and Supramax fleet. Each of these time charters comes with an option to extend the charter agreement at a fixed rate, and we have the option to purchase the vessels at a fixed price, which further expands our optionality. Our collaboration with Nihon Shipyard and Mitsui has progressed well in designing an efficient dual-fuel vessel capable of running on fuel oil as well as sustainable methanol. However, we remain cautious in our approach to invest in new buildings due to current historically high new building prices. We will consider in 2024 whether we are ready to contract to build such a vessel with delivery well ahead of our original 2030 target. We anticipate ordering activities for such midsize dual-fuel dry bulk low-emission vessels will be limited in 2024.
Please turn to slide 15. We continue to be disciplined buyers of secondhand vessels given current historically high prices, while still remaining committed to our long-term strategy to grow our own fleet of Supramax vessels by acquiring high-quality modern secondhand vessels and to replace our older and less efficient Handysize vessels with younger and larger Handysize vessels. In the first quarter, we sold a 2004-built Handysize vessel, anticipating challenges and higher costs from stricter decarbonization regulation. We plan to gradually divest our least efficient ships. With new and secondhand vessel prices expected to stay historically high due to rising new building costs and limited yard capacity, we will remain cautious in our investments in secondhand vessels, including all current agreed sales and purchases.
Our core fleet today consists of 132 Handysize and Supramax vessels, and including short-term chartered vessels in our operating business, we currently have approximately 302 vessels underwater overall. Please turn to slide 18. In 2024, freight rates began higher than in 2023, and it is encouraging to see the level of support for freight rates during the first quarter of 2024, which is historically a softer period for demand. We remain significantly exposed to spot freight rates due to a considerable number of uncontracted vessels stays in 2024, while maintaining this approach into 2025. We expect to benefit from higher spot rates as normal seasonality improves commodity demand following the end of the first quarter of 2024. Additionally, there will be an ongoing benefit to supply and tonne-mile demand from limited transits of dry bulk vessels through the Suez Canal and Panama Canal.
We are pleased that we continue to grow our fleet through long-term. We continue to reward shareholders through the return of cash, through dividends, and now also share buybacks. We remain excited about the long-term prospects of dry bulk shipping, thanks to the positive demand for the commodities we ship. These are supported by favorable supply side fundamentals and the ongoing implementation of both existing and new decarbonization rules. Ladies and gentlemen, that concludes our first quarter trading update presentation. I will now hand over the call to the operator for Q&A. Thank you.
Thank you. We'll now begin our question and answer session. If you have a question for today's speaker, please join the Zoom link via the blue "Ask a Question" button, press the right-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&A box. Okay. The next question is from Parash.
Can you hear us, Parash?
And yeah, I think initiating a buyback is a welcome move. I have two questions.
Can I just start all over again because we couldn't hear you, so we can only hear you now?
Sure. Okay. Lovely. No, no worries. I said initiation of buyback is a welcome move, so thank you for that. I have two questions. First, if you can talk a bit more about how shall we think about the spread or the premium that Pacific Basin manages to deliver over the market rate?
Because over the past few quarters, it seems to be gravitating towards the market rate. How shall we think about it for the rest of the year and perhaps going forward? And secondly, with respect to the congestion in Panama, Gulf of Aden on the Red Sea, on your estimation, what percentage of capacity would have been absorbed on those congestions, and is that the one that will basically eventually make effective demand higher than the supply? Thank you.
Yeah. Thank you, Parash. Yes, you've rightly spotted that our premium, of course, has come down somewhat. I think remembering back from 2021 and 2022, of course, it was a totally different market, and of course, the spread at that time was somewhat higher.
I think when you look at the end of last year and into this year, I think it's first of all, I think it's important to say that we are outperforming the market, but I agree the spread has come down somewhat. And the reason for that is probably mainly because the market actually didn't have the same dip as it had last year. So you can say it was the right thing to take the cover, but last year, we were benefiting, of course, from a somewhat lower dip in the market than we saw this year. And I think the challenge a little bit the last three, four months for also for our salespeople has, of course, been that the market fluctuation is also driven a little bit by these disruptions, the Red Sea and the Panama Canal. It's super difficult to predict those changes.
And then, of course, there's also the trend that when the market is down and the market starts going up, we are trailing and we are running a little bit after the market. So our outperformance is always the indexes keep going up, and we fix two , three months ahead. So as long as the market continues to go up, there's a tendency we will run after the market until the market stabilizes, and then, of course, we will pick up. And if the market goes down, we will actually outperform. So I actually think at the moment, it's actually a good sign, funny enough, that we are not outperforming the same way as we have done. That is also an indication that the market is actually going up. And then, of course, I would say over the year here, we will see an improvement in that side of it.
I hope that explains it a little bit.
Yes. Yes. Yes. Yeah.
And I think that the other question in respect to, yeah, both the Panama Canal and the Red Sea, it does have an impact. And there's always a discussion of how much is it. But for sure, any disruption has an impact on our market. I do think there's a difference between container and dry cargo. I think containers, especially on the Red Sea, the market is the products are made in the East and shipped to the West. So I think it has some big impact on the container side. On dry cargo, our market, especially on the minor bulk, is in the Atlantic-Pacific. Of course, there is some movement between the two areas, but I don't think it's necessarily so that just because you can't sail through the Red Sea, that then you sail south.
I think actually our commodities, there's probably a tendency that you'll find different places to source the product or the commodity in it. So we're not forced to sail that way. But it does have an impact on the business. And I think we've seen Clarkson estimating up to 2% impact on the supply side of it. So, of course, it has an impact. Sure.
And if I can just chip in one follow-up question, if you can remind us your CapEx for 2024 and some thought process behind the buyback. I presume that this buyback will be over and above your 50% of the profit goes as the dividend. And shall we think about you would intend to maintain your current leverage, and anything of free cash flow over and above that will form part of a buyback?
Is this buyback will be recurring in nature, or you will assess it each year?
Yeah. I think we are glad that we have started the buyback. Of course, I think the reason for the buyback i quite clear. Last year, we did invest, I think, $190 million in new assets. For us, it's, of course, we like to grow our business and do the right thing in that. This year, the asset prices, since we bought the last ship in November, I think asset prices have gone up 10%, maybe even 20% on a modern Ultramax. And we just see when we look at our share price, we see it's much better for our shareholders to the cheapest asset we can buy is basically our own share. So that's the main driver of doing it. Our capital allocation is unchanged.
It's still a minimum dividend of 50%. And anything excess of that is either in the form of extra dividend, special dividend, or share buybacks. And I think we are glad to do the share buyback now, and then we will evaluate it by the end of the year to see if this is the right thing and also see what has the market done in general in it. Because we will do what is right. We'll be disciplined on the capital allocation. We'll be disciplined in also going and buying assets. We have to, of course, make sure that we do what is right for us and for the shareholders in that respect.
Sure. Yeah.
Capital allocation-wise, I just did the calculation here. We have the dockings. That's $65 million. Dockings and some investments in silicone paint to optimize the performance of our ships. That's $65 million.
We had the dividend we announced for last year. That's the $40 million that will be paid out soon. We have some borrowing amortization of debt, $45 million. Then we do have some options on a few ships to buy, which is in the money, I think, up to three ships. One of them we will definitely buy. That's $20 million. Less than $20 million, but about $20 million.
And the other two I think that what was that $45 million about? Sorry? Sorry? What was that $45 million of debt? What was that about?
I'm sorry. It was amortization of debt. Amortization.
Oh, okay. Okay. Yeah.
And then $20 million, at least, on one of the three options we have to buy back. And now the share buybacks are $40 million. And I think that all in all is $215 million in CapEx. CapEx. Yeah.
A little bit more than $200 million in CapEx. Look at these things.
Yeah. And you can say, yeah, you're sort of our leverage. Of course, we today have basically no leverage. And you can say with the market rates we have today, we are generating good cash. I think I also mentioned the cash rate even. So we are in a very good position on that part. So if the market continues as it is at the moment, we are generating very, very good cash going forward. We like the leverage we have, but of course, that's a good position to be in. But I don't think there's anything wrong in getting a little bit more leverage. But let's see how it goes over the year.
Absolutely. Yeah. And I understand that you guys don't do NAV, but can you roughly guide the market?
Where would be the current NAV of your fleet versus the book value? If you can share.
And not too worried, you always ask. We do not give guidance on that. No worries.
You can say a little bit about if you look at our annual report 2023, our book value is $1.8 billion. End of 2023, the share price was more or less supporting that book value. So that was price-book ratio of one. If you look at it today, you can see that our share price has dropped. I see it's 6%. And as mentioned by Martin, asset prices have gone up. Asset prices have gone up. Especially on modern Supramax, they have probably come up 10%-15%. Some of the older ships, maybe 5-10 percentage points.
So you can say the gap we're looking at today, measured on a value-adjusted NAV basis, is bigger than it was at the end of 2023. Yeah.
And could I also say, Parash, last year, I'm sure that somebody says, "Why didn't they do that before?" And maybe that's a good question. But if you go a year back, I think the outlook that was the end of COVID and the outlook for China. And there was a lot of things to be worried about at that time. And at that time as well, we could buy ships that we thought would be value-generating for the company. I wouldn't say we probably still couldn't buy some ships, but the cheapest asset we can buy is actually the stock. We are much more optimistic about the market going forward than we were early last year.
So that's probably why the timing we feel is the right time to do it now.
Lovely. Thank you so much for taking much of your time. Thank you so much. And I'll get back to you if there's any question. And have a wonderful evening.
Yeah. Thank you very much, Parash.
Thanks, Parash.
The next question is from Nathan.
Hi, Martin. Hi, Michael. Thanks for the call. Maybe just two.
You also disappeared, Nathan. Can you try again?
Hi. Can you hear me now? Hello?
Yes. We can hear you.
Thank you. Martin, Michael, thanks for the time. Just two questions from me. Firstly, just in terms of cover, it seems like you've got higher covered days for second quarter and second half versus previous years for Handy. Help us understand the rationale for this, and how does that reconcile with the view of the market going up?
That's the first question. And then secondly, just to follow up on Parash's question around buybacks, should we think about this $40 million buyback as an additional return on last year, the 2023 net income, or is this part of the shareholder return attributable to 2024 net income? Thank you.
Yeah. Yeah. I'm sure you're right that our cover is a little bit higher on the Handys now than it was earlier in it. Yeah.
Still, more than one-third of it is backhaul. I think we are comfortable with the cover we have. I know the rates, when you sit and look at it, might look a little bit low, but we always report basically the lowest numbers. There's no real we don't put much upside in anything in these, and normally, we do improve them over time in it.
And there will, of course, be some seasonality in the market this year as well. So let's see how it goes and how much we can improve those numbers in the market. I think it's worth saying that last time we did the report, we can see that just by adding 5%-6%, we have actually increased the cover level quite a bit since we did the report for the full year. So it's a good market at the moment, and it, of course, also helps to improve the rates. In respect to the $40 million, it is 2024, Nathan?
Yeah. And it will run for the entire calendar year. So our success criteria is that we utilize the full allocation, and we can manage this program over an eight-month period until the end of this year. So it is a 2024 event.
I'm not sure I know exactly what the difference is, but last year, we paid dividends 75%, and this year, we start with a share buyback of $40 million. It's our intention to spend that money on share buybacks unless something very special happens. Which is a good start. It's a good start.
Very clear. Maybe just to follow up, I guess my question around cover was more just versus first quarter last year or the year before, and so the percentage. So this year, you covered Handy at around 84%. I think in previous years, it was lower than that. Was this you just taking a conservative view around the market?
I think when we this cover, of course, was done mainly end of last year. They are done well in advance.
I think if you go back five, four months, we were probably a little bit more worried about the market than we are today. Well, entire last year, we were worried about the market and China. And of course, we are coming out of that being a lot more optimistic about it. You're right looking back at it. It's a little bit harder question. You could argue there's maybe some cover we can say should we have done that. We still outperform the index in what we do. So being exposed to the spot market wouldn't necessarily improve our earnings, but maybe we had to have better timing in previous market changes and market fluctuations than we have had this time.
Okay. Perfect. Thank you.
Thank you, Nathan.
Next question is from Andrew Lee.
Hello. Can you hear me?
Can you hear me, Andrew?
Hey. Hi. Thanks for your time. A few questions on my side, right? The first question I have is on your fleet, right? You mentioned in the notes that you're considering 2024, whether to contract such new builds. Is that a change in the strategy? Because previously, the strategy was, "We don't want to buy any new builds." So is this a change in strategy that you are now considering new builds? That's the first question. The second question I have would be related to the scrubber effect. Why is it so much smaller for the Handysize? Is that mainly because you have less number of scrubbers on the Handysize? If it was just on a Handysize vessel, right, what's the scrubber premium?
Third question I have is, when you announced your results, full year results in February, March, you were quite optimistic on the overall outlook, right? Would you say today you're more optimistic now than where you were before? And then final question, I know there's quite a few, right, is the first four quarters, the rates were actually quite strong. Was that because of demand, or do you think was that because of the disruptions through the canal? Thank you.
Yeah. Thank you very much. Yeah. Andrew, first, the new building, I don't think anything has changed. I think what we've said is that we will not do new buildings unless they are zero or low-emission vessels. That's what we have been saying.
I think if you go back in the last few years or many years, actually, also for us, when we did the calculation, it always made more sense for us to buy secondhand than new buildings. Of course, with the increase also in the secondhand values, maybe that has changed a little bit. But it doesn't change the fact that we will still only do the new buildings if they are zero-emission. We will still only do the new buildings if they are zero-emission or low-emission vessels. And I think when we look at our fleet and when we look at our fleet and green fuels and these things that we are investigating, but we know we have to do the low-emission vessels. And we also know that the existing fleet we have, we can't rebuild them. So they will never be low-emission vessels.
We can optimize them and try to improve them, but we cannot make them low-emission vessels. So the only way to do that for our segment, the minor bulk segment, and that's for everybody in that segment, is to go for new buildings. So I think that's more a question about when to do it than if we're going to do it. In respect to scrubbers, you're right. Of course, I think we just want to indicate that we now have two ships, two Handysize with scrubbers who, of course, contribute to the 70 other ships with $75 a day. 75 ships. 75 ships. Sorry. Yeah. And we do have a few more ships coming off the time charter ships which also will have scrubbers. And that will, of course, help us a little bit on that part.
So maybe we are a little bit detailed information, so maybe a little bit too much information, but it all helps. And then you asked me if I'm more optimistic now than we were, what is it, a couple of months ago. I think we were also optimistic at that time, and I think we are equally optimistic at the moment. I think that the market is, when you look at the derivatives and FFAs, in contango and you can see that that's a positive sign for sure for us. It is. So yeah. And I think when we talk to our commercial people around the world who are close to the customers, they are optimistic about the market outlook for at least the beginning of this year. So I think that's very positive. And then there was a question about third quarter. Yeah.
The demand orders. Was it demand-related, or was it disruption-related?
Well, I think it is a this doesn't work unless demand is there. And I think when you look at the demand picture for the different commodities, it is positive, actually. So when we also look at the world and there's some discussions about what are the commodities doing and the world is not going as fast as we had hoped for, when you look at commodities, especially China as well, but also to a certain extent, the U.S., it is actually going well. So it is a demand thing. But on top of that, of course, these disruptions, which is, of course, the Red Sea and the Panama Canal, of course, that also helps. But we also see increased congestion in China. That's also increasing at the moment.
We see the ship's speed being fairly low, and that, of course, has to do with the oil price is high, fuel prices are high, so ships doesn't speed up, probably also a little bit related to the decarbonization rules, fuel EU and sorry, EU ETS, and so on. So there's a lot of things going on on the supply side and so on. So there's a lot of things going on on the supply side as well. So it's okay.
Maybe just one quick question, right? You mentioned that the new ships is going to be roughly 20% larger capacity. When will that be reflected in the TCE of freight rates, right? Because we probably need to model that into our models, right? So when do you think that will have a full-year impact?
Well, you can say it's the earning capacity of these kinds of ships that we have getting from the yards. They are just 20% higher than the average of the existing fleet. That, of course, has to do with the size. It has to do with the fuel efficiency and these things. And of course, as soon as the ships come into the fleet and we start trading them, they will have an impact. They will earn more than depending on the market, of course, but they will earn 20% more than the average of the rest in it. So you should see that impact fairly quickly. And we also have it on page 14. Yeah. On page 14, you can see when the ships are being delivered, Andrew.
Yeah. Got it. All right. Thank you.
Yeah. Thank you.
As a reminder to the attendees, if you have a question, please press the right-side button, and you will enter the queue. After you are announced, please unmute yourself, state your name and company, and ask your question. There are currently no questions.
Thank you. Yes. I think we'll end the call. So I'd like to thank you again for—sorry?
As there are no further questions, we will now be closing remarks. Please go ahead, Mr. Martin Fruergaard.
Thank you very much. I'd like to thank you again for joining us today and for your continued support of Pacific Basin. If you have any further questions, please contact Peter Budd from our investor relations department. Thank you very much.