Welcome everyone to the First Quarter 2021 Earnings Conference Call for 2020 Bulkers. As usual, I'm also joined here today by our Chief Financial Officer, Vidar Hasund. Before we start the presentation, we would 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. They are subject to risk and assumptions that are subject to uncertainties. Actual results may differ materially. With that, I'll move over to the highlights for the quarter. 2020 Bulkers generated a net profit of $5.8 million in the first quarter. This marks our highest quarterly result since we started operations, and we're pleased to deliver our seventh consecutive profitable quarter. That means we've been profitable every quarter following the delivery of our first vessel in Q3 2019.
We continued to outperform the Capesize Index during Q1 this year. We achieved average time charter equivalent earnings of $23,900 per day in the quarter. This compares to Baltic Capesize Index, which was approximately $17,100 per day. For the months of January through March, we announced a total of $0.26 per share in cash distributions. So far this quarter, we've earned approximately $33,000 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 $5.8 million for the first quarter of 2021. Operating profit was $8.2 million, and EBITDA was $11.1 million for the quarter. Earnings per share was $0.26. Revenues were $17 million in the first quarter, and the average time charter equivalent rate was approximately $23,900 per day gross. Vessel operating expenses were $4.1 million in the first quarter, which is an average of approximately $5,600 per day per vessel. Vessel operating expenses includes approximately $600 per day per vessel in COVID-19 related expenses. 2020 Bulkers had a total of 720 operational vessel days in the first quarter. G&A for the first quarter was $0.8 million. Interest expense was $2.4 million in the first quarter, and currently the company's paying approximately 3.6% in average interest rate on the company's long-term debt. Shareholders' equity was $144.5 million at the end of the quarter.
Interest-bearing debt decreased from $250 million at the end of the fourth quarter to $246.4 million at the end of the first quarter, reflecting scheduled repayments. The company reports cash flow from operations of $9 million for the first quarter. Cash and cash equivalents were $20.2 million at the end of the quarter. The company have declared total cash distributions to shareholders of $0.26 per share for the months of January, February, and March 2021. That completes the financial section. Now back to you, Magnus.
Thank you, Vidar. The Capesize market has had the strongest start to the year in more than 10 years. Year to date rates are close to four times higher than what we saw last year. Today's rates are around four and a half times the levels we saw one year ago at the same date. At the current rates, taking into account the premium we are getting on our Newcastlemax with scrubbers, our index vessels are today earning around $50,000 per day. What's driving this strength? Number one, we're seeing strong volumes out of Brazil, which are up approximately 15% year-over-year. We're also seeing good volumes out of Australia, which is so far up around 3% compared to last year.
The Brazilian volumes are of course very important in this context, as one ton exported from Brazil requires around three times the vessel capacity of one ton exported from Australia. Vale, earlier this week, reported their Q1 results, having produced 68 million tons of iron ore. They're maintaining a guidance with a mean point of 325 million tons for the year, which would imply we should see an uptick in volumes with an average of around 85 million tons per quarter for the remaining quarters this year. We're also seeing a tightening coal market with news out yesterday that the National Development and Reform Commission in China has reportedly started directing customs to release more import quotas for the year to boost coal imports in preparation for the summer season.
Although Capesize spot rates are the strongest seen in the decade, they're still low relative to the value of the freight we're carrying. Historically, freight rates from Brazil to China have averaged around 16% of the price of Brazilian iron ore. As an example, if rates were to revert to that average ratio, current iron ore prices should support rates for standard Capesize of around $50,000 per day, which would mean that our index linked vessels earn around $65,000 per day, including the scrubber benefit. As you know, 2020 Bulkers' main mission is to give shareholders a good return on their investment through monthly dividends. As you can see from this sensitivity table, which takes into account the fact that we have two ships at fixed rates and six ships at index-linked rates for the rest of the year, our dividend potential is significant.
We of course can't give any guidance on rate expectations, but as a reference, the current FFA curve from May through December implies a potential annual run rate of 26 NOK per share in annual distributions. The current spot rates, which are higher, would imply a run rate of around NOK 35 per share. We'll now take a look at some of the key market drivers. The Chinese steel industry continues to be the most important demand driver, with China representing 70% of imported iron ore globally. Chinese steel production for January through March 2021 was up 14% compared to the same period in 2020. Although the Chinese government during recent months has imposed restrictions on steel production in certain areas in order to limit pollution, the most recent production data from ESI shows no signs of a slowdown.
The data shows that the period between April 10th and 20th showed the highest reading on record. We also see that steel output outside of China has recovered. We're optimistic in terms of continued strong development given the fiscal stimulus packages that are being announced all the places these days. Taking a look more specifically at the iron ore side, we see that Chinese iron ore imports were up 8% year-over-year for the period January through March 2021, with March showing an increase of 18% compared to March 2020. In spite of these high imports, inventories are still relatively moderate and currently sit at around one month of estimated consumption. Taking a look at the supply side. We believe the supply side dynamics in our market are the most attractive seen in more than 30 years.
The Capesize order book is around the lowest level seen since the mid-1980s. With the current order book at around 5.5% of the existing fleet on the water, fleet growth is set to be low in the years ahead. Capesize ordering was the lowest last year we've seen in 20 years. Given the recent massive ordering in the container space, yards are filling up and there's very little yard capacity available for new orders before 2024. Scrapping also remained healthy last year, even in the second half of the year as the market recovered. Also given the strong rates this year, you could have expected scrapping to be less. We've seen 12 Capesize being scrapped year to date. We expect that scrapping will remain at a relatively decent level given some of the upcoming environmental regulations that we'll talk a bit more about shortly.
We also talked about this on our previous call, but we like to go through it once over because we think it will have a major impact on the supply side of shipping in the years ahead. In January 2023, IMO will most likely implement EEXI, an energy efficiency index, which effectively reduces the allowed CO2 emissions from the global shipping fleet. Noncompliant ships may comply by applying performance-enhancing measures, which typically requires a significant investment and in many cases will not get them into compliance. The more realistic alternative for most operators with older ships will be to reduce the engine's power output. We also see, having looked at the profile of the fleet, that a significant part of the current trading fleet may not be able to comply at all and may have to retire their ships early.
We see it as inevitable that the implementation of EEXI will reduce the average sailing speed for the fleet, and it will lead to more modern ships being favored by charters, and they should therefore be commanding an earnings premium following the implementation of EEXI. Lastly, I wanted to give a quick summary of what our company looks like and what we believe is the investment case. We have a fleet of eight Newcastlemax vessels with an average age of one year. This is the most modern fleet among our listed peers. At today's spot rates, our index-linked vessels earn approximately $50,000 per day, which compares to a cash breakeven budget of $14,500 per day, including all debt service. The current FFA curve for the rest of 2021 implies time charter equivalent earnings for a scrubber-fitted Newcastlemax of around $40,000 per day.
We pay all our free cash flow as monthly dividends. In terms of the market, I think we're looking at the most favorable supply-side dynamic in more than 30 years. This comes at a time when demand is expected to continue to recover as the world comes out of COVID-19. With that, I'll leave over to the Operator for questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star and one on your telephone and wait for your name to be announced. Once again, it is star and one for any questions. We do have a request from the line of Frode Mørkedal of Clarksons Securities. Please go ahead.
Yeah, thank you. Hi, Magnus.
Hi, Frode.
Yes. On the chartering side of it, you have two ships now, two out of eight that are on fixed charters. I believe you still have the ability to turn those floating charters into six months, right? The question is really, would you consider that in today's market, by any chance?
Yeah, I think this is, of course, something we look at every day. It's something that we think is very attractive with our chartering model, the fact that we can have ships on floating rates and as you say, we may choose to convert them at times. I think right now we are very constructive on the market. Of course, the market is higher than it's been in a long time, if you just simply look at the day rates. However, if you look at where we are, we are typically coming out of what's usually the slow season. We do expect volumes to be ramping up out of Brazil in the coming months as they typically do this time of year. Also looking at the supply side, most of this year's order book, or the most heaviest deliveries came between January and April.
We see the pace of deliveries will be lower from there on out. With all that in mind, we still think that supply-demand should be tightening, and I think therefore we haven't converted anything more for the time being. It's something we're evaluating on a continuous basis. I guess we did two earlier in the year, which we of course thought were okay levels, but they also brought down the effective cash breakeven for the rest of the fleet to a very low level. Meaning that essentially as long as the Capesize market is above $5,000 a day, our other index ships will cover the remainders that's needed to cover its cash breakeven. We are extremely well protected on the downside. We see a good supply demand dynamic for the next couple of months. I think with that we're keeping it open for now. We of course watching this every day, as I said.
Yeah, that sounds good. On that final note on the supply side, I think you just mentioned it, but there is limited yard capacity for Capes. Just wondered if you could elaborate on that point, please.
I think that's one of the things that really make us exciting. Aside from the fact that demand is recovering as the world is getting out of COVID-19. You are currently at the lowest order book probably seen, I think we subscribe to your data, but it doesn't have anything that's lower since 1996. I've done some more digging, and I think you have to go back to 1986 to find a similarly low order book. What's happened in the recent months is there's been a massive influx of container vessel orders. More than 200 ships ordered in the recent months. This has taken up a lot of the capacity that would otherwise be used for building big bulk carriers. I think secondly, the yards typically have better margins on building container vessels. They'll always prefer to do that if they can.
We are of course not looking to order any new builds. Just to say that very clearly, that's not in this business model. We did go out about a week ago through two different brokers, checking what's being marketed presently in terms of available capacity for Capesize or larger. I think we counted around eight slots divided on four yards until the end of 2023. Now of course there will be along the way some slots that are reserved for options that will not be declared and there are always some unreported orders in the market that are concluded but not out there. Again, if we were to start this company once over and go and order eight ships, and you would want to stick to one yard, you could get maybe two ships in 2023 and the rest would be in 2024.
In shipping it's always tough to predict the demand side although you know it's been growing over time pretty steadily 3%-4% for dry bulk. Where you can have some confidence is on the supply side and we just know there's not a lot of ships that can come out in the coming years. If you add EEXI on top of that which will take down the utilization of the fleet by slower speeds. I don't think there's ever been a time where the supply side looked so attractive. Of course, also a consequence of the tightening yard capacity is new build prices are going up.
We are seeing now, I think there's been few orders but there was an order last week for two new Newcastlemax without scrubbers for $58 million which means ordering one of our similar vessels today would probably be at $60 +. We're very encouraged with what we're seeing there. It's going to help supply demand and it's pushing prices higher.
Great. You mentioned new build prices are going up and what are you seeing in terms of secondhand values?
Yeah, I think they are of course also going up quite rapidly. Just looking at Clarksons' values, a 10-year-old vessel was probably around $20 million at the end of last year. I think you're marking them for $28 million today but there was actually one sold last week for $30.5 million so secondhand values are moving up but I still think they are lagging compared to where you see time charter rates. Typically you see time charter rates move ahead and then values follow. The last time you saw one-year time charter rates for a standard Capesize at similar levels was in either late 2014 or early 2015. At that point in time a resale standard Capesize was $65 million so it's definitely on the move up and it's lagging time charter rates. If time charter rates hold or move higher, I think you're going to see even bigger moves.
Yeah, I agree. Just a final question from me is on the EEXI. Have you heard any good estimate on how much slow steaming we could expect?
The answer is it's very difficult to create a rule of thumb and apply it across the fleet because this all depends on the efficiency of the individual ships, and you actually need sea trial reports enabled in order to calculate it. I've seen some data from one of the class agencies suggesting that 1/3 of the fleet might have to slow down by 20% or so. That's an estimation that's been out there. I think we've seen cases when we have had access to some data of ships built as recently as 2010, 2011, that will have serious problems meeting this because you can of course reduce your output, but you get to a point where it impacts speed to the level that the ship gets handicapped and trades unacceptably slow. I wish we could just say a number, this is it. It's not that simple, but it will have an impact. I think that's for sure, assuming this gets implemented on January 1st, 2023, as the plan is.
Yeah. Seems so. Thank you very much.
No, thank you.
There are no further questions at this time. As a reminder, if you'd like to ask a question, please press Star and One on your telephone. We have one more question here. That is from Eirik Haavaldsen from Pareto Securities. Please go ahead.
Yeah. Hi, Magnus. Two questions really. One, how much of the current strength do you think is explained by fleet inefficiency? Congestions and port waiting and so on. I guess it's been going on for a long time. Is this also with COVID delaying everything everywhere, basically? Is that also a contributing factor here?
I think earlier in the year, the strength we saw in January was definitely driven by inefficiencies. You had extremely cold weather, as you may remember. There was lots of ice in China. We had vessels that were waiting for up to 20 days, I think, to discharge. We did an update now just looking at the global congestion, because there's always, I guess, in shipping, a hiccup somewhere, but it's actually calmed down quite a lot. I wouldn't say that we're at any kind of extreme levels. I think the thing in our trade that's probably creating a bit of inefficiency is quarantine restrictions in conjunction with crew change. It's not an issue if you're going to Brazil or West Africa, any of those destinations.
Of course, if you're doing a crew change and you're going to Australia, in theory you have some waiting time because you need 15 days before you can get in. I think it looks to me like most of the operators have found ways and are planning around the trade patterns because, again, if you're doing a long voyage you shouldn't necessarily have a lot of extra downtime. The way we look at it, we don't see any major inefficiencies. If you were to look for things that could loosen the market maybe there's a little bit to go in terms of speed, but it seems to us that it's a very balanced market and it's not just the Capesize market because the smaller sizes are tight, as you know. It feels like a pretty solid, gradual tightening that has to do with less ships coming out and the trade recovering.
Agree. When you look at your company, obviously today it is impossible to replicate what you built a few years ago. When you look at your yield, based on current markets, based on FFAs, based on what you are seeing and booking, obviously your dividend yield is high. It is kind of impossible not to accumulate cash here. Is it tempting at all to accelerate a little bit the debt repayments to be less levered? You are not levered, but even less so ahead of schedule, really? Should we assume you to just pay out everything almost regardless of the dividend yield?
Yeah, I think you should assume the latter, that we pay out everything that we're left with each month after debt service and including interest and amortization. Of course, we do keep a cash buffer, so we always have a minimum of around $20 million that tends to sit there as cash. I don't think we see any need to lower the debt either. To us, the debt level is one thing, but the absolute most important thing is your cash breakeven. I mean, even with some additional cost that we're seeing related to COVID-19, which Vidar Hasund hinted to earlier, we're budgeting $14,500 all in for the year. I think we typically, if you had everything spot, we earn that with a Capesize market of less than $10,000. I think a lot of our peers need $13, $14 for a Capesize.
We're at the lower end of the cost curve. We've also shown that we occasionally take some cover to lower that even further. As I said, for the rest of the year if the standard Capesize market is $5,000 a day then the index ships cover our whole company cash breakeven together with the two ships fixed on contract. I think we're very comfortable with where we're sitting. As you point out there should be some very significant dividend capacity and we intend to continue paying that out to shareholders.
Just a final one. Do all your index-linked contracts have clauses where you can turn them into fixed contracts?
Yes. They have. The conversions are done on the basis of the FFA market. That is a very liquid market and we've done this quite a few times now. There's never been any issues in doing the conversions.
Okay. Thank you very much.
Thank you.
I'm not seeing any further questions. Once again, if you'd like to ask a question, it is Star and One on your telephone. There are no further questions at this time. Please continue.
Well, I think that concludes the presentation then. Thank you for everyone who dialed in and we'll speak again soon.