Thank you, Mark. Thanks, everybody, for joining us this morning, and thank you, Noble, for organizing and inviting us to participate in this event. I will take a little bit of time, about 15 minutes, to give you an overview of EuroDry, which is a company that owns and operates ocean-going vessels of the type that carry commodities in bulk, like grain, coal, iron ore, bauxite, alumina, these types of things. The standard forward-looking statements. So EuroDry has been in business for the last eight years now. It has been spun off from another company, the presentation of which I will give following this one, called Euroseas. Euroseas has been around in the public markets for the last 20 years. So EuroDry includes the dry bulk vessels that Euroseas used to own and has started its own separate course since May 2018.
It's a small company for the standards of American public markets. We have a market cap of just about $30-$35 million, depending on the price. As I will explain going through the presentation, we believe that the intrinsic value of the company is three times higher, so I hope I will be presenting an interesting opportunity for people to consider. EuroDry owns right now 11 vessels, relatively modern. I think eight of them are quite modern, have been built within the last 10 years, and three of those we have built ourselves. We also have three older ships, around 20 years of age. Typically, ships of that type last economically around 25 years.
In addition to the 11 ships that we have on the water, we have placed orders to have constructed for us two additional ships, which we expect to take delivery in about a year and a half, in the middle of 2027. The EuroDry and our former parent, Euroseas, encapsulate the shipping interest of one of the traditional Greek shipping families, the Pittas family, that traces its roots all the way back to the 19th century, 150 years plus of history in shipping in various forms and in various sectors. The family has survived two world wars during which they lost most of the ships, and the current generation, our CEO and my friend, Aristides Pittas, has started his generation's involvement about 30 years ago, and 20 years ago, I joined him in bringing the company to the public markets.
We manage our ships through a management company that is owned by our CEO's broader family. This is a quick glimpse of our ships. As I mentioned, we have eight, I would say, modern ships. They are all built in China. We have three older ships built in Japan that used to be workhorses at the time of the industry, at the time that they were built, and we have two vessels under construction. You can see them at the bottom part of this table. So the overall average age of our fleet is about 13 years, which is in the middle of the lifespan of a ship these days. And if you exclude the three older ones, the younger ones are noticeably younger. You may ask, you are eight years being in the public markets. You are a small stock, I admit, with limited trading liquidity.
Why are you still there? I think we are there because we want to provide an additional alternative to people to invest. Investing in dry bulk, as we'll discuss in a second, is really investing in world economic developments, and especially China. In presenting and developing this alternative, we want to grow and modernize our fleet, and indeed, we have done that over the last couple of years by selling some of our older ships and replacing them with younger ones. We can grow via various ways, either by the earnings generated for our ships. Again, as I will explain shortly, the last year and a half has been not very good in terms of the markets, but things appear to be shaping up nicely, definitely for the fourth quarter in 2026 and hopefully beyond.
So with a form of organically produced funds and M&As, I guess, since we have a public platform, we intend to grow EuroDry and use it as a platform to consolidate even smaller owners. One of the interesting points in the dry bulk market is the supply side. Let me explain to you very quickly what this chart shows. The chart shows in the blue line the fluctuation of the earnings of the rates that our ships earn on a per-day basis. One thing that has made shipping known in the world is the volatility of its returns. You can see here 20 years' history of earnings for vessels, for a typical dry bulk vessel, in the blue line, and you can see the market really went way high back just before the financial crisis and even before the period that this chart covers.
When China became part of the World Trade Organization, there was a shift in trade that created a huge opportunity for shipping. So that was sown with this explosion of rates. Of course, the financial crisis had them come down, and then there was a decade of misery, so to speak, really produced not so much by the dynamics of the industry itself, but outside capital, unusual outside capital that was poured into the industry. When the market dropped in 2008 dramatically, a lot of private equity investors considered that they found a diamond in the rough and invested heavily in shipping, building new ships and creating a larger supply. So that kept the industry in relatively depressed mode for about 10 years. Things became dramatically better during COVID. The inefficiencies introduced in the transportation system helped shipping, and we'll see that more into the next company that we'll discuss.
And then since that, the industry has been moving sideways, so to speak. The interesting part of this slide is the red line. The red line shows how many ships are on order right now as a percent of the existing fleet. And you can see back in 2008, it was about 80% of what was being constructed was 80% of the then fleet. For the last five years, that percentage, you can see on the bottom of the right part of the slide, it has been really, really low at historically low levels. So that being low for so long means that the fleet is underbuilt. It is aging, and there is not much supply waiting to come in. So any increases in demand should be translated in increases for rates and values for the sector.
Shipping is an industry, one of the few remaining industries where pure supply and demand interaction shapes prices and rates, so if demand grows at normal levels, even better if it grows above normal levels, then we should see a very bright outlook for shipping, especially dry bulk shipping, because the supply side, the other half of the equation, is relatively constrained. To give you a sense of what is a normal level for that number, that 11% that you see there, is that it takes about two years to build a ship. If a ship lasts 25 years, that means about 4% of the fleet, assuming uniform age distribution, retires every year, so over two years, you need to replace 8% of the fleet because of aging, and if trade grows by 2.5%, trade growth for two years, another 5%, so something below 13% is a low order book.
An order book between 11 and 13, 14% should be a normal range. So we have been below a normal level of order book, and that positions the industry, the sector, to benefit from any increases in demand. So really, investing in dry bulk means that you believe in a story where world trade in raw materials would do well. And that really depends by at least 50% on China's economic growth. So investing in dry bulk right now is really believing the story that China will remain a contributor to world trade growth. And of course, there are secondary aspects that could contribute to more demand for raw materials. I mean, the reconstruction in Gaza, the reconstruction of Ukraine, if all this at some point takes place, will contribute positively to demand. I mean, prices follow a similar range with rates, so I will not bother you with that.
I think the slide I showed you before. These are more details on the points I made earlier. This provides you more insight on the breakdown of the order book. The bottom left slide shows the age distribution, and you can see that the fleet is not quite uniformly distributed age-wise, but relatively close to that. There was a boom of middle-aged ships that relates to that peak in order book that I showed you earlier. Then the question becomes what trade demand will do, and as I mentioned already, that is very much linked to world economic growth. This chart makes a point in a rough way. I'm not saying that there is some rough statistical correlation between the world GDP growth and demand for dry bulk trade, which you can see on this chart.
On top of that, not only the volume of trade matters, but also the distance over which that volume is moved. For example, a couple of years ago, when the Panama Canal was reduced in capacity because of the lack of fresh water to work the locks, then that created additional demand for ships because ships have to go around South America or find a different route to go to the Far East. Similarly, more recently, and still now, the Suez Canal is under duress. The Houthi attacks over the last year and a half to two years on shipping forced everybody to go around Africa, and that created additional demand for ships. So there is the fundamental, the base demand, the need to use raw materials and dry bulk commodities, but of course, there are all the other factors that could affect demand, positively or negatively.
Another one that is important to have in mind is the environmental regulations that come into play that have to do with the control and reduction of CO2 emissions. One easy way for shipping to comply with this and some other similar reductions is to slow down the ships. The power and consequently the consumption, the fuel consumption that you need is proportional to the cube of the speed. So if you slow down 10% a vessel, you save 30% of fuel, roughly. So that is a way to deal with the emissions and be within the limits. Slowing down 10% of the fleet, it means you need 10% more fleet. So all these factors come into play and create an interesting, relatively volatile environment, which has a fundamental support from the supply side, and really your bet is on demand and on these factors. Again, I will not elaborate.
These are the major commodities that we carry with our ships. Iron ore is a big part of the pie. 27% of what we carry with dry bulk ships is iron ore, and that rate, this is based on an industry analyst, broker house, Clarksons of London, that provides some trends on the market, is looking positive over the next couple of years. Coal trade on the opposite is not looking very good because we want to decarbonize. Of course, our president might have buck the trend and sort of delayed it or changed it. But generally, the world thinks that and wants to move away from coal, and that's why the coal trade trends seem to be negative. There are two pieces on the coal trade.
There is a piece that relates with the steel production, metallurgical coal, and that is going alongside with steel production and iron ore, and the thermal coal that is used for energy generation, that is the one that very likely will be substituted by other means of energy production. Grain, steel products, all of these make up the landscape that demand is shaping up. Let's keep that one. Let's talk a little bit about our fleet. One thing, this slide shows you how our ships are employed, right? The rates that they earn, etc. I mean, if you look carefully at the numbers, I realize they are small. You will see the last set of numbers for every ship is higher, so the market has been improving, and the forward market looks quite promising for next year as well.
The observation one can make by looking at this chart is that most of our fleet is exposed to the spot market. So it is rented out for short periods. Even the last two or three, actually the last five, four of the last five ships that you see that have longer bars, you can see there that there isn't a fixed rate except from the second to last. The others, they don't have a fixed rate. They have a multiple of an industry index. So those two, although they have secure employment because they are chartered, the rate of that employment depends on an industry index reflecting the appropriate size. So we are fully exposed for the market, and you can consider, and we have done that in purpose because up until now, the market has been relatively modest or not satisfactory.
We didn't want to tie up our ships on long-term contracts. The second from last vessel, the Christos K, recently, earlier this month, I mean, late last month, has been booked on a year-long charter because we felt that at $15,500, which is the rate of that ship, we make profits and we have positive contributions. So we wanted to gradually, as the market improves, move a portion of our ton-miles into fixed employment. We consider this positioning an advantage in light of a hopefully rising market. Of course, during a market that was low, that cost us in terms of results. And this chart at the bottom of this slide shows the dependence of our earnings to the state of the market.
Because of the strategy we followed, short-term charters, what we earned was the shape of what we earned over time was a pure function of how the market developed. The blue and the black line are our EBITDA and our earnings respectively, and the red lines are market rates. So the way market moved, so did our earnings. If the market improves, we expect our earnings to improve as well. The last two slides, and I will be happy to answer any questions. So the top part of this slide shows our leverage, how much debt we carry to fund our investments, our ships. Shipping is a capital-intensive industry, so traditionally, it relies partly on debt financing.
We have debt that represents about 50% of the value of our ships, and this is a measure used by banks to determine whether you are in a risky state or. Typically, shipping gets financed between 50%-65% by debt, depending on the point of the cycle. So I would argue that we are modestly levered. And then the bottom slide, the bottom chart shows our break-even level in terms of $ per day. And taking cash flow terms and taking everything into account, we come up with about $12,000 cash flow break-even level. You saw in the previous slide that we booked a vessel at $15,500. So that comparison allows us to change our strategy, our chartering strategy, and move some of our tonnage into fixed employment to be able to lock in a certain margin on a portion of our fleet.
Final point, very quickly, highlights from the balance sheet. Again, the balance of a shipping company is very simple. You have cash and vessels on the one side, and you have debt and shareholders' equity on the other side. So if we take our ships and sell them in the market, and mind you, in the shipping markets, there is an active second-tier market for the assets. So if we take our ships and sell them one by one, we will get and pay down the debt, the $100-and-something million, and distribute the proceeds to our shareholders. Each shareholder will get about $45 a share. We trade around $13 a share. So that's why I claim that we have significant appreciation potential. I realize why that discount is there is because we are a small stock. We have low trading volume.
But if the market improves, as Warren Buffett often said, “a tide lifts all boats,” it will lift our boat a lot higher than the others. So that is really one of the key reasons why one should look at us, the attractive valuation. You are taking a bet on world economic growth in China. You should feel somewhat comforted because the supply growth outlook is controlled. So staying only on those two main reasons, I think it will be a good opportunity to look at our stock.
Just to start off, Pallas, I was saying the dry bulk market has been experiencing challenging times, and I think that that's been reflected in the valuation. But as you mentioned, there's some green shoots that the fourth quarter is shaping up nicely. There's some catalysts for 2026.
You're operating mainly under short-term duration charters, so you have a lot of exposure to the improvement in the market. Could you just address some of the catalysts that you see for that improvement and how close are rates to the point you might go a little further or longer on the duration?
Yeah, I think really the main reason, and that was our thesis and my thesis for the last three years and hasn't proven true, hopefully is coming true over the next year that because of the low supply, we would see a significant boost of rates due to demand increases. Demand did not come as expected, and really this is where I look to see positive outlook for us. The market sees the same. I want to believe. Allow me to go back to this slide.
You can see the second to last, the 15,500. This is a rate that the market was willing to pay for our ship for the next 12 months. It's a strong indication that players in the market believe that the market will be good at that level or hopefully for them higher for the next 12 months. At the same time, there is an active FFA market, forward freight market. The other vessel that you see, 115% of BSI, this Baltic Supramax Index, this index, the forward aspect of it is again at 15,000 or above translated for our ships. So we believe we'll move in the high teens in 2026, counting on demand rebound, China, and the reconstruction efforts, and somewhat on supply help from the slowdown of the fleet and the low order book. So in a nutshell, this is really the thesis for looking at dry bulk.
for looking at Euroseas is because we have been ignored. When things get better, we will not be ignored.