Welcome everyone to the fourth quarter 2020 earnings conference call for 2020 Bulkers. As usual, I'm also joined here today by our CFO, Vidar Hasund. Before we start the presentation, we'd like to remind you that we will be discussing matters that are forward-looking in nature. These forward-looking assumptions are based on the company's current views with regards to future events, and they're subject to risk and assumptions that are subject to uncertainties. Actual results may differ materially. With that, I'll move it over to the highlights for the quarter. 2020 Bulkers generated a net profit of $3.6 million in Q4. We're pleased to deliver our sixth consecutive profitable quarter, having been profitable every quarter since the delivery of our first vessel in Q3 2019.
Again, we outperformed the Capesize Index during Q4, and we achieved average time charter equivalent earnings of $20,500 per day during Q4 compared to the Baltic Capesize Index, which averaged approximately $16,944. For the months of October through December, we announced a total of $0.17 per share in cash distribution to shareholders. Lastly, on November 2nd, we transferred our shares from the Oslo Axess list to the Oslo Stock Exchange main board. So far this quarter, we've earned approximately $28,500 per day on average across the fleet. With that, I'll leave it over to Vidar.
Thank you, Magnus. 2020 Bulkers reports a profit of $3.6 million for the fourth quarter of 2020. Operating profit was $6.2 million, and EBITDA was $9.1 million for the quarter. Earnings per share was $0.16. Revenues were $14.6 million, and the average time charter equivalent earnings was approximately $20,500 per day in the fourth quarter. Vessel operating expenses were $4 million, which is an average of approximately $5,400 per day per ship for the quarter. Vessel operating expenses includes approximately $300 per day per ship, which is COVID-19 related. 2020 Bulkers had a total of 736 operational vessel days in the fourth quarter. G&A for the fourth quarter was $1.3 million and included full year director fees and employee bonus and a non-cash share option expense of $0.1 million. Interest expense was $2.6 million in the fourth quarter. Shareholders' equity was $142.1 million at the end of the quarter.
Interest-bearing debt decreased from $253.8 million at the end of the third quarter to $250 million at the end of the fourth quarter, reflecting scheduled repayments. The company reports cash flow from operations of $7 million for the fourth quarter. The company have declared total cash distributions to shareholders of $0.17 per share for the months of October, November, and December 2020. Cash and cash equivalents were $19.9 million at the end of the quarter. That completes the financial section. Now back to you, Magnus.
Thank you, Vidar. Before we move over to talk about the current market, we'd like to give a few comments around our historical performance. As you can see, we have been profitable every quarter since we took delivery of our first vessel in August 2019. We think this can mainly be attributed to three factors that are critical in how this company is set up. Number one, our modern and fuel-efficient fleet gives us a premium compared to a standard Capesize vessel of around 35%. In addition, we earn a premium related to the scrubber savings, and it's worth noting that the fuel spread between low sulfur diesel and heavy fuel oil has gone from approximately $60 per ton at the bottom last year to around $110 per ton today. We think these spreads can widen further as the world comes through COVID and airline traffic picks up again.
Number two, we have a low cash breakeven, which is largely driven by attractive financing as well as low SG&A cost. Number three, lastly, this company is created to pay dividends in good markets. However, we're always very focused on protecting the downside. A good example of this is how we adapted last year when we were coming into the year with full, more or less spot exposure, except from two ships, and we quickly turned that around as we saw the COVID outbreak creating uncertainties and negative impacts on the dry bulk trade. Moving on to have a look at where we've started this year. Year-to-date, Capesize rates are the strongest we've seen since 2015. Actually looking compared to last year, Capesize rates are 170% higher than the year-to-date rates.
The market is being well supported by strong iron ore volumes, with particularly Brazilian exports being up 25% year-over-year and Australian exports being up around 5%. We're also seeing some increased coal trade. China was really not importing any coal towards the end of last year as they've hit their quotas. We now see new quotas and coal imports are flowing again. We're also seeing some longer distance volumes going from the U.S. Gulf and U.S. East Coast, which is helping the market. We're heading into what's usually a very slow season for dry bulk. We think we will see some of that seasonal slowness this year as well.
However, due to the COVID outbreak, China has implemented staggered lunar holidays this year, which effectively means that you will probably not get that period where industrial production slows down because all workers are traveling, but it will rather be spread more evenly out over the course of the year. We're also looking at much lower fleet growth this year compared to what we've seen in recent years. The Capesize order book stands at 16 million deadweight tons compared to 25 million deadweight tons delivered last year. Keep in mind, we also saw scrapping last year of around 12 million deadweight tons. Moving on now that we've established the market is onto a strong start. We are very well positioned to take advantage of this strong market. For Q1, we are all spot except from two vessels fixed at rates of around $18,500 per day until April.
From there on, we have all our eight ships exposed to the spot market. If you look at our cash breakeven of $14,400 per day, we think we will be in a good position to pay dividends as the year progresses. Here we took a look at our dividend capacity on various Capesize rates. Based on our current chartering profile, we should be able to pay dividends as long as the standard Capesize rate is above $10,000 per day. This sensitivity shows that we have somewhat more exposure to the spot market in the second half of the year when we don't have any ships on contract as of now.
To give some example of what the dividend capacity can be, if you take the January to date Capesize rates, which are just about $20,000 per day, that would in theory give a run rate dividend potential of more than one kroner per share per month. Moving on to take a look at some of the key market drivers. China is the key demand driver, and they import around 70%-75% of all seaborne iron ore. After the short setback during COVID-19 initial outbreaks last year, Chinese steel production has recovered to record levels with last year's production levels up 6% year-over-year for the months of January through November. This, of course, led to a surge in iron ore imports into China, and we saw an 11% increase in iron ore imports for the period of January through November 2020.
We don't have any more recent official customs data, but looking at AIS satellite data, it seems like January is on track for an almost 10% year-on-year increase versus last year. We're also, in the context of this, encouraged to see that iron ore inventories are still relatively low, measured in days of consumption. As you can see from the graph on the right, China has actually been through a destocking cycle since 2018. Taking a closer look on how global steel production has developed post the initial COVID outbreaks. We can see that the global production is already back to pre-COVID levels. This represents a recovery that's been stronger and quicker than what we saw following the global financial crisis. Initially, and mostly, it's been driven by China, but we see that the rest of the world is showing improvements month-over-month.
Acceleration here as the vaccines are more widely distributed, and the world can restart. Moving on to have a look at the supply side. I think with no new orders in the Capesize segment, the supply outlook is looking better day for day. The Capesize order book is already at the lowest level seen in the last three decades, with an order book around 6% of the existing fleet. This is actually the lowest level seen for as long as Clarkson had data, which goes back to 1996. Capesize ordering last year was the lowest in 20 years, and there have been no orders placed so far this year. We do expect that ordering will pick up but still remain at relatively low levels.
I think some of the key drivers for this is the lack of financing available from traditional lenders, as well as the technological uncertainties about what the correct propulsion system might be for the future in terms of meeting the long-term decarbonization goals for the shipping industry. As mentioned before, scrapping remained healthy last year and even remained so in the second half as the market recovered. So far, we've seen two VLOC scrapped, and we do expect to see more scrapping in light of new upcoming environmental regulations that we'll talk a bit more about later. Going a bit more in detail on the supply side, here we look at the new build Capesize deliveries and how they're spread throughout the year. It's interesting to see that the fleet growth becomes very marginal as we get through the April deliveries.
We of course, don't know what scrapping will be, but if you assume it will be similar to last year, we're quite confident we'll see months in the second half of the year when we have negative month-to-month fleet growth. That's particularly interesting picture given that the second half is when we typically have the strongest ton-mile demand. I think this gives a setup for a pretty interesting market in the second half of the year. It's also one of the main reasons for why we want to keep as much spot exposure as possible for the back half of the year. Another factor we want to point out comparing this year to last year, and particularly when it comes to what's the effective supply, it's the low share of the Capesize fleet that's sitting in shipyards compared to what we saw a year ago.
Last year, owners have been rushing to the yards to fit scrubbers ahead of the IMO 2020 regulations. As a consequence, almost 6.5% of the Capesize fleet was sitting idle in shipyards on New Year's Eve. These ships started trading over the coming months. Effectively, they gave 4%-4.5% effective supply growth over the course of six to seven months. This came in addition to the new builds that we're delivering. As you can see, the share of the fleet in yards are today at relatively low levels, which implies there is less hidden supply that could come out and hurt the market. Lastly, I want to talk a bit about the new upcoming environmental regulations.
In 2018, the IMO adopted the target to reduce CO2 intensity from shipping by 40% from the 2008 baseline until 2030. As a consequence of this, the industry is in the process of implementing EEXI, which may be introduced as early as October 2022. EEXI sets limits for the amount of CO2 that can be emitted per ton of transport supply, and it will apply to all existing ships. If you have a non-compliant ship, you may try to get approval by doing some performance-enhancing measures. These will all require investments. The more likely way forward will be for ships that don't fulfill the requirements on day one to reduce their engine's power output. We also see that there's a significant part of the fleet that may not be able to comply at all and may have to go for early retirement.
I think it's no doubt the implementation of EEXI can be expected to reduce the average sailing speeds of the global fleet, particularly for older vessels. As a consequence, we believe it will lead to modern, more efficient ships being favored by charters, and they should also be able to command a larger earnings premium following the implementation of EEXI. With that, I think we leave it over to the operator for questions.
Thank you. We will now begin the question and answer session. Your first question comes from the line of Frode Mørkedal of Clarksons Securities. Please go ahead. Your line is open.
Yes. Thank you. Hi, Magnus. It seems like you are optimistic about the market, maybe you could just summarize the market outlook and maybe give us what you think is a realistic dividend potential.
Yeah, we are optimistic about the market, Frode. I think if we take a step back, we had some problems in the Capesize market last year related to the low volumes out of Brazil. As you remember, Brazil is very important as one ton transported from there requires three tons of vessel capacity over Australia. I think the reasons for that weakness was, of course, the accident two years ago, and then the subsequent repair and maintenance one year ago. We saw that volumes picked up nicely during the second half of the year, and we see that there's still upside towards Brazil's target. That's an important driver. Of course, generally speaking, on the demand side, China is the biggest client.
It's in the iron market, as we like to say, it is firing on all cylinders. We do see that other nations and also developed countries are announcing fiscal stimulus packages and efforts in that increasing infrastructure spending once we get out of COVID. I think that strong demand backdrop paired with really the most interesting supply side dynamic we've seen in at least 20 years, maybe longer. The order book, as I said, for Capesize and larger vessels is the lowest on Clarksons data. We know if people go to the shipyard today to order a ship, it's probably going to take 25 months before you get the first one. There's really not too much that can change that in the short term. I think as I touched upon as well, last year was tough.
In addition to the low, of course COVID, the impact that's had on trade, the low volumes from Brazil, you had this 5%- 6% of the fleet that came out to the yards fitting scrubbers, and that's looking completely different this year as well. I think the reason for being bullish both has to do with the demand and the supply side outlook. I think dividends, it's clear that we've positioned ourselves for a strong market and we're hoping to pay some substantial dividends. That will, of course, depend, as you know, on what rates are from month to month. We do pay out all our free cash flow on a monthly basis. I think January to date, we've seen rates of more than $20,000 a day.
At $20,000 a day, even with the two ships on fixed charter, we should be able to pay at least a quarter if the board agrees. Maybe more. I think who knows where the market goes? We're used to some pretty weak years recently, but if you look at the last 20 years, Capesize rates have averaged more so $30,000 a day. If we get $30,000 a day Capesize rates, we can pay $30,000 in dividends, which is almost half the market cap. I can't tell you what it's going to be, but we think there is some reason for being relatively optimistic.
Yes, I agree. Maybe you can just remind people on how and why Newcastlemax achieved this 35% premium you mentioned. I guess in relation to that, how you were able to convert some of the floating charters into fixed charters last year. What's the incentive for the charterer at the time to agree to a lot higher rate?
Yeah, I think the premium is just a function of how these ships are performing compared to a standard Capesize, which is used for calculating the index. We have 25,000 or 28,000 tons larger cargo intake. In the spot market, you're paid on a dollar per ton basis. If you can carry more tons at the same dollar per ton rate and the operating cost is approximately the same, you earn a premium there. Of course, our ships burn less fuel than the standard Capesize. An index vessel burns around 43 tons of fuel, trading at 12 knots laden and 13 ballast, whereas we burn on our ships 35, 36 tons. It's a combination of the fuel efficiency and the larger cargo intake.
On top of that, we of course get the scrubber premium, and I think people haven't been paying too much attention to the scrubbers over the last year with the low oil prices. Even where they are now, we should be getting net to us on a per day basis north of $2,000 per day. It is significant, and I think as the world restarts and we get an increase in jet fuel demand, those spreads should widen even further. Your other question was on the conversion rate. The way our indexing charters work is they're linked to the Baltic Capesize Index, so we get the premium to the daily rate there. We also have certain mechanisms that allow us to convert to fixed rates for a period of time if we want to do so, and that's done on the basis of the FFA market.
I think that can be used both to lock in rates defensively, but also if you get to a level which you think is okay and just want to secure those rates. I mean, last year, when the world was looking very uncertain and spot rates were in the low single digits, we converted ships on the basis of the FFA curve, and that's really what made us profitable through that year. Of course, if the FFA curve moves up a lot and we think it's level we want to lock in long-term charters, we can do that as well. That's how those contracts work.
Are you able to do that again, or is that option now used?
We can do it multiple times. Of course, when you fix it, you can't un-convert it, but we have multiple declaration rights to do so.
Okay. Sounds good. Final question. We have seen newbuild prices have been gaining for the past few months, I would say. I'm curious to know how you think about that and more generally, I guess, on how you think secondhand values should develop now with obviously a lot stronger freight rate environment at the start of this year.
Yeah. I think there's no doubt that both are moving up, is the short answer. When it comes to newbuild prices, the yards have been pricing as aggressively as they can in order to try to stimulate some orders in an environment where there really hasn't been any orders. I think what we see now is with the lower weaker dollar against the Asian currencies, as well as the higher steel prices that we've seen over the last few months, they're just simply not able to keep those prices. We're starting to see some orders coming in as well. I'm quite confident that newbuild prices have passed the bottom. When it comes to secondhand prices, there's actually been quite the big move, I think, in the last one or two months.
I think it probably has both to do with newbuild prices tightening, also with the market improving. There might have been times where real values were a bit below broker values towards the end of last year. Now, I think real values are probably leading broker values. I think in the Capesize and Newcastlemax segment the idea that potential resellers of modern ships have are at least up 10% from where they were in December. For five to 10-year-old ships, I would say values are probably up more towards 20% compared to where they could be transacted back in November, December.
Okay. Thank you very much.
Thank you. Your final question comes from the line of David Bhatti of SEB. Please go ahead. Your line is open.
Yeah. Hi, Magnus. Just wanted to touch upon your costs, because, OpEx and G&A was a bit higher this quarter, which you clarified. Could you please just explain how it's going to look in the coming quarters?
Yeah, I think for OpEx we are incurring as long as COVID is playing into our lives some additional costs related to crew changes. I think both for Q3 and Q4, those were around $300 per day. When it comes to G&A, it was a bit higher this quarter than it will be going forward, and it has to do with a few factors. One, we had some costs related to legal fee and up-listing fees in conjunction with the move from Oslo Axess to Oslo Stock Exchange. I think secondly, we paid our directors this quarter. I mean, the directors have not been paid cash up until now, and that will be spread out per quarter going forward. Same goes for some employee bonuses.
I think the run rate going forward on our budget should be approximately $500,000 less per quarter in G&A than what you see in this Q4.
Okay, good. Thanks. That clarifies it. Thanks.
Thank you. There are no further questions coming through on the line, sir.
Okay, thank you. If there's no more questions, I want to thank everyone who dialed in, and that concludes our Q4 2020 conference call.