Conferencia de resultados del 3T 2026 de Genco Shipping (GNK): dividendo récord de $1.05

Puntos clave

• Genco Shipping & Trading Limited reportó un beneficio neto de 38,0 millones de dólares en el tercer trimestre de 2026, mientras que el beneficio neto ajustado alcanzó los 39,2 millones de dólares.
• El EBITDA ajustado aumentó más de un 200% interanual hasta los 68,1 millones de dólares, impulsado por un alza del 73% en las tarifas equivalentes de fletamento por tiempo (TCE), situándose en 27.539 dólares diarios.
• El consejo de administración declaró un dividendo trimestral récord de 1,05 dólares por acción, un 31% más que en el segundo trimestre de 2026 y un 600% interanual. Se trató del 29.º dividendo trimestral consecutivo de Genco.
• Para el cuarto trimestre, el 66% de los días disponibles propios se fijó en aproximadamente 30.100 dólares diarios, frente a una tasa de equilibrio de flujo de caja prevista de unos 10.500 dólares por buque al día, excluidos los gastos de capital vinculados a la entrada en dique seco.
• La dirección proyecta un dividendo para el cuarto trimestre superior a 1 dólar por acción, asumiendo las contrataciones actuales y la curva vigente de acuerdos de flete a plazo (FFA), lo que situaría el dividendo proyectado para todo el año por encima de los 3,20 dólares por acción.
• Genco cerró el trimestre con cerca de 400 millones de dólares de liquidez disponible, incluidos 95 millones de dólares en efectivo y 300 millones de dólares en capacidad de crédito rotativo no dispuesta.

Datos financieros clave

Desempeño comercial y operativo

Genco operaba 44 buques tras la entrega en agosto del Genco Volunteer, un buque Capesize construido en 2019. La flota está compuesta por 20 buques Capesize y Newcastlemax y 24 buques Ultramax y Supramax.

La dirección señaló que el Genco Volunteer se incorporó inmediatamente al mercado al contado de Capesize y obtuvo una prima respecto al Baltic Capesize Index. Desde 2023, Genco ha invertido 408 millones de dólares en buques Capesize y Newcastlemax generadores de primas. La inversión total en buques modernos y de altas especificaciones desde el lanzamiento de su estrategia de valor en 2021 alcanzó los 557 millones de dólares.

La compañía continúa equilibrando el mayor apalancamiento operativo de los buques grandes con el perfil de ingresos más estable de los buques de graneles menores. Aunque los buques Capesize y Newcastlemax representan el 45% de la flota por número de embarcaciones, los buques Capesize aportaron más del 50% de los ingresos netos en los últimos dos años.

La dirección cuantificó la sensibilidad de las ganancias de la flota: cada incremento de 1.000 dólares en la TCE del conjunto de la flota añade aproximadamente 0,36 dólares por acción a las ganancias y a la capacidad de dividendos. Un aumento de 5.000 dólares en la TCE en los 20 buques Capesize y Newcastlemax aporta aproximadamente 0,81 dólares por acción.

Las tarifas de graneles secos se vieron respaldadas por el sólido comercio de mineral de hierro, el aumento de las exportaciones de bauxita de África Occidental, la aceleración de los envíos de mineral de hierro de Simandou y la renovada demanda de carbón. El Baltic Capesize 180 Index promedió más de 41.000 dólares diarios en el tercer trimestre, su nivel trimestral más alto desde 2021. Por su parte, el Baltic Supramax Index promedió más de 19.000 dólares al día, su cota más alta desde 2022.

Orientación de la dirección

Genco había fijado el 66% de los días disponibles propios del cuarto trimestre en aproximadamente 30.100 dólares diarios. La dirección indicó que la TCE del cuarto trimestre avanzaba a un ritmo para subir casi un 70% interanual y alcanzar su nivel más alto desde el cuarto trimestre de 2021.

Sobre la base de las contrataciones del cuarto trimestre hasta la fecha y la curva actual de acuerdos de flete a plazo para el resto del año, la dirección proyecta un dividendo superior a 1 dólar por acción por segundo trimestre consecutivo. Esto situaría el dividendo proyectado para todo el año 2026 por encima de los 3,20 dólares por acción.

La compañía planea continuar renovando su flota. La dirección mantiene su preferencia por buques de mayor tamaño, pero enfatizó que los barcos de tamaño mediano siguen siendo importantes para respaldar un flujo de caja y dividendos estables. El despliegue de capital dependerá de las oportunidades disponibles y de la disciplina en las transacciones.

Riesgos y factores a vigilar

• La dirección prevé que continúe la volatilidad en las tarifas de flete de graneles secos a pesar de su visión positiva sobre los fundamentos de oferta y demanda del mercado.
• El clima lluvioso en Brasil redujo los envíos recientes de mineral de hierro, mientras que los elevados costes de combustible y flete afectaron a los productores brasileños más pequeños.
• El aumento en la valoración de los buques podría limitar las oportunidades para adquirir barcos Capesize modernos, aunque una mayor valoración de los buques más antiguos podría respaldar operaciones de venta de activos y renovación de la flota.
• Las limitaciones de capacidad en el Canal de Panamá vinculadas a El Niño podrían perturbar las rutas durante la temporada de granos de América del Norte, lo que podría incrementar las distancias de navegación y las ineficiencias de la flota.
• El crecimiento neto de la flota de graneles secos fue del 3,9% durante los primeros nueve meses de 2026. La dirección señaló que el 12% de la flota existente tiene al menos 20 años de antigüedad, lo que genera potencial para una futura demanda de reemplazo.

Puntos destacados de la sesión de preguntas y respuestas con analistas

Los analistas preguntaron si las recientes tarifas de los buques Capesize indicaban un suelo de mercado estructuralmente más alto. El director ejecutivo, John Wobensmith, atribuyó esta resiliencia a un mercado con un equilibrio ajustado, el crecimiento en los envíos de bauxita de África Occidental, la aceleración más rápida de lo previsto en Simandou y la limitada oferta de buques. Asimismo, señaló que unos precios de combustible marítimo (bunker) más bajos podrían mejorar los márgenes de los exportadores brasileños más pequeños de mineral de hierro.

En cuanto a la estrategia de flota, la dirección hizo referencia a la venta previa de dos buques Supramax más antiguos y a la reasignación de capital hacia un Capesize moderno. Genco planea continuar con la renovación de su flota mientras evalúa oportunidades tanto en buques grandes como de tamaño mediano.

Respecto al apalancamiento, el director financiero, Peter Allen, explicó que Genco dispuso de 50 millones de dólares en el tercer trimestre para financiar el saldo de su adquisición de agosto. La compañía podría alternar entre la retención de efectivo y el pago de deuda para gestionar el gasto por intereses, mientras que su estructura de crédito rotativo le otorga flexibilidad y no conlleva amortizaciones obligatorias en la actualidad.

La dirección también abordó la divergencia entre las mayores importaciones chinas de mineral de hierro y la menor producción de acero. Atribuyó esta tendencia, en parte, a la menor producción nacional de mineral de hierro y al mayor uso por parte de China de mineral transportado por vía marítima de mayor ley procedente de mercados como Australia, Brasil y Guinea. Asimismo, la dirección identificó a Vietnam y la India como posibles fuentes de demanda adicional de mineral de hierro de alta calidad.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Third Quarter 2026 Earnings Conference Call and Presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained through Genco's website at www.gencoshipping.com.

To inform everyone, today's conference is being recorded and is now being webcast at the company's website, www.gencoshipping.com. We will conduct a question-and-answer session after the opening remarks. Instructions will follow at that time. A webcast replay will also be available via the link provided in today's press release as well as on the company's website.

At this time, I will now turn the conference over to the company. Please go ahead.

Peter Allen

Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words in terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday, the materials relating to this call posted on the company's website in the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2025, and the company's reports on Form 10-Q and Form 8-K subsequently filed with the SEC.

At this time, I would like to introduce John Wobensmith, Chairman and CEO of Genco Shipping & Trading Limited.

John Wobensmith

Good morning, everyone. Welcome to Genco's Third Quarter 2026 Conference Call. I will begin today's call by reviewing our Q3 2026 highlights and dividend outlook for the remainder of the year. We will then provide additional details on our financial results as well as an update on the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website.

Beginning on Slide 5. During the third quarter, we continue to make meaningful progress executing our comprehensive value strategy, which is generating compelling value and returns for shareholders. Through the execution of our well-defined capital allocation strategy, we have successfully transformed Genco into a low leverage, high dividend company supported by a fleet of premium earning assets industry low breakeven levels and a leading commercial operating platform.

Since implementing our comprehensive value strategy in 2021, we have invested $557 million in high specification modern vessels. We have also distributed nearly $10 per share in dividends or approximately 40% of the current share price, while paying down debt, reducing our cash flow breakeven rate and growing and renewing our fleet.

The strength of Genco's comprehensive value strategy was evident in Q3 as we once again capitalized on a robust dry bulk market to generate strong earnings and dividends for shareholders. Notably, strong results in the third quarter reflect our well-timed Capesize acquisitions that have significantly increased our earnings power and dividend capacity.

During Q3, we took delivery of our third premium earning vessel this year at the Genco volunteer, a 2019 built Capesize vessel. Upon delivery in mid-August, we immediately deployed the volunteer in the strong Capesize spot market, earning a meaningful premium to the Baltic Capesize Index.

Following this latest acquisition, our total investment in premium earning Capesize and Newcastlemax vessels since 2023 stands at $408 million with asset values having risen significantly since these purchases as Capesizes have outperformed all other dry bulk sectors generating strong returns.

In the third quarter, we drew on our significant operating leverage and earnings power to generate strong cash flow. Specifically, in Q3, we achieved our highest quarterly TCE rates since 2022, resulting in adjusted EBITDA of nearly $70 million. We also benefited from our focus on increasing our dividend capacity, declaring a Q3 dividend of $1.05 per share, the highest quarterly dividend per share in Genco's 20-plus year history. Our Q3 dividend represents a 31% increase compared to Q2 2026 and a 600% increase on a year-over-year basis. It also marks our 29th consecutive quarterly dividend paid to shareholders, the longest uninterrupted period in our dry bulk peer group.

As depicted on Slide 6 and 7, we achieved multiyear highs for the Q3 dividend, TCE and EBITDA and expect to continue to generate strong results for shareholders in Q4 and beyond. Based on our strong Q4 fixtures to date and assuming the current FFA curve for the balance of the year, we reiterate that the fourth quarter dividend is projected to be over $1 per share for the second consecutive quarter. This would bring our projected full year dividend to over $3.20 per share.

Turning to Slide 8. Genco continues to maintain industry-leading corporate governance, which has underpinned our shareholder-focused outperformance. We maintain a strong and majority independent Board of Directors, and we are the only U.S. listed dry bulk shipping company with no related party transactions.

Moving to Slide 9. Genco has one of the lowest cash flow breakeven levels in our peer group, which supports our strong earnings power. This is directly related to our low net loan to value as well as having no mandatory debt amortization. In addition to significantly increasing our TCE on a year-over-year basis during each quarter this year, we continue to markedly exceed our low cash flow breakeven rate. Specifically, our Q4 TCE to date of over $30,000 per day is nearly $20,000 per day above our cash flow breakeven rate.

On Slide 10, we highlight the strategic benefits of our balanced fleet composition. Following the Cape delivery in August, we own a fleet of 20 Capesize and Newcastlemax vessels as well as 24 Ultramax and Supramax vessels. Importantly, we continue to balance the upside potential of the Capesize sector, along with the steadier earnings profile of the minor bulk ships.

On a vessel ownership basis, our splits are 45% Capes and 55% Ultra Supras. However, when viewed on a net revenue basis over the last 2 years, we are over 50% weighted for Capesize vessels, putting us in a unique position in our peer group to benefit from the strengthening freight rate environment.

On Slide 11, we highlight the current operating leverage provided by our fleet of 44 vessels, every $1,000 fleet-wide TCE increase equates to $0.36 per share of incremental earnings and dividend capacity while every $5,000 increase in TCE for our 20 Newcastlemax and Capesize vessels equates to an incremental $0.81 per share.

Turning to Slide 12. We also continue to balance our high operating leverage with our low financial leverage, providing us with flexibility to operate across various freight market conditions. In stronger markets, we generate meaningful cash flow with our industry low breakeven rate and scalable fleet. In market downturns, Genco's low financial leverage and undrawn revolver capacity enable us to pursue countercyclical growth opportunities. Importantly, Genco remains well positioned to continue to drive value and returns for our shareholders and play offense in any type of dry bulk market.

I will now turn the call over to Peter Allen, our Chief Financial Officer.

Peter Allen

Thank you, John. On Slides 14 through 16, we highlight our strong third quarter financial results, which were driven by our sizable operating leverage, growing fleet and industry low breakeven levels.

For the third quarter, Genco reported net income of $38 million or $0.87 and $0.85 basic and diluted earnings per share. Adjusted net income was $39.2 million or $0.89 and $0.88 basic and diluted earnings per share, excluding other operating expenses of $0.4 million, impairment on vessel assets of $0.6 million and an unrealized fuel loss of $0.2 million. Adjusted EBITDA for Q3 totaled $68.1 million, an increase of over 200% year-over-year. This was led by a time charter equivalent rate of $27,539 per day which rose by 73% as compared to Q3 2025. Notably, our cost structure was similar on a year-over-year basis, highlighting the operating leverage inherent in our fleet. We also continued to achieve strong fleet-wide utilization rates of over 98% as we maximize utilization in strong freight rate environments.

Our adjusted EBITDA for the first 9 months of 2026 totaled $161.1 million, which is approximately 270% higher year-over-year, already well above the full year 2025 levels which puts us on pace for 2026 to be our highest earnings year since 2021. We continue to generate meaningful cash flow and maintain significant financial flexibility. Our cash and debt positions as of September 30, 2026, were $95 million and $380 million, respectively. Our undrawn revolver availability at quarter end was $300 million, bringing our total available liquidity to nearly $400 million.

With our full revolving credit facility structure, we plan to continue to actively manage our cash and debt positions to reduce interest expense while maintaining access to capital to act on growth opportunities. We view our strong balance sheet as a core component of our comprehensive value strategy and a strategic asset that enables us to act quickly and decisively as we have demonstrated in the recent years with our accretive growth initiatives.

As outlined on Slide 17, we believe Genco is in an advantageous position with a fleet of 44 high-quality, modern dry bulk vessels, significant operating leverage combined with low financial leverage, a $10,500 cash flow breakeven rate and $300 million of undrawn revolver availability, we provide an attractive risk reward balance for shareholders. Furthermore, we continue to provide shareholders with compelling quarterly dividends. Our dividend policy targets a distribution based on 100% of operating cash flow less a voluntary reserve as described on Slide 18.

In the third quarter, our board declared a record dividend of $1.05 per share, which equates to an annualized dividend yield of 17% based on the current share price. The formula-based dividend is calculated on an operating cash flow of $66 million and a quarterly reserve of $19.5 million. Operating cash flow in Q3 increased by 20% relative to Q2 and rose by over 200% on a year-over-year basis, which flowed through to the dividend.

Looking ahead to Q4, we currently have 66% of owned available days fixed at a rate of approximately $30,100 per day as compared to our anticipated cash flow breakeven rate, excluding drydocking related CapEx of approximately $10,500 per vessel per day. Importantly, Q4 TCE is on pace to increase by nearly 70% year-over-year and reach our highest level since Q4 of 2021. As a result, we project another dividend of over $1 per share in Q4 2026 to close out a strong year for Genco.

I will now turn the call over to Michael Orr, our dry bulk market analyst, to discuss the industry current landscape.

Michael Orr

Thank you, Peter. Beginning on Slide 20, during the third quarter of 2026, freight rates continue to rise following a strong first half of the year, specifically with Baltic Capesize 180 index averaged over $41,000 per day in Q3, the highest quarterly level since 2021, while the Baltic Supramax Index averaged over $19,000 per day, the highest mark since 2022. We believe the strong dry bulk earnings environment is due to a continued solid iron ore trade, significant growth in bauxite exports and a reemergence of the coal trade. These demand-side catalysts have extended trading distances accentuating the existing capacity constraints of the dry bulk fleet.

Turning to Slide 21. China continues to import large volumes of iron ore, Specifically, China's iron ore imports in the year-to-date have increased by 4%. Australian iron ore exports remain firm, have increased by 3% year-over-year. While Brazilian volumes after setting a record high in June have softened in recent months due to a combination of atypical wet weather conditions and high fuel and freight costs impacting smaller Brazilian miners. Historically, Brazilian exports are approximately 20% higher in the second half as compared to the first half of the year. Capesize vessels in the Atlantic Basin have also been supported by strong bauxite exports originating in West Africa as highlighted on Slide 22 and 23.

Furthermore, Simandou iron ore exports have steadily grown and appear to be ahead of schedule with 21 million tons shipped in the year-to-date and a record of 5.3 million tons shipped in October. Going forward, given the scale of the expected growth projects from Simandou on the iron ore side as well as continued iron ore growth from Vale in Brazil and bauxite out of West Africa, these incremental volumes could absorb potentially over 200 Capesize vessels. Supply constraints and new building activity, combined with added long-haul trading distances are 2 key catalysts for the sector.

Furthermore, as detailed on Slide 24, with the escalation of geopolitical tensions in recent months, coal demand has been strong. A confluence of events have supported the coal trade, including a reduction of LNG capacity, gas to coal switching in certain Asian economies, a reduction of domestic coal output in China due to safety concerns and El Nino. Notably, we have seen an increase in coal cargoes originating from the U.S. and Colombia with Asian destinations. These long-haul trade routes once again further stretch the dry bulk fleet.

On Slide 25, we highlight the global grain trade. We are currently in North American grain season in which we typically see increased soybean shipments from the U.S. to China. China has already increased its purchases of U.S. soybeans year-to-date imports already exceeding all of last year. Peak U.S. Gulf shipments coupled with potential Panama Canal capacity constraints due to El Nino could result in more dry bulk vessels rerouting, extending ton-miles and increasing fleet-wide inefficiencies.

In terms of new building deliveries in the year-to-date, as outlined on Slide 26, net fleet growth in the first 9 months of 2026 was 3.9%, split between 2% net fleet growth for Capesizes and 3% to 6% net fleet growth for Panamaxes down to Handysize. Additionally, as scrapping has remained low in recent years, the age of the global fleet has risen to 13 years old, the highest average age of the dry bulk fleet since 2010. This has increased the pool of potential scrap in Canada as 12% of the on-the-water fleet is 20 years or older which is close to the global dry bulk order book as a percentage of the fleet of 16%. This implies net replacement tonnage over time as opposed to any material net fleet growth. While we expect volatility in the freight market to persist the foundation of a low supply growth picture provides a solid basis for a positive view of the dry bulk market going forward.

I will now turn it back over to John to conclude the call.

John Wobensmith

Thank you, Michael. Turning to Slide 28. The third quarter marked another period of disciplined execution of our comprehensive value strategy, resulting in strong financial results as we generated multiyear high levels of EBITDA and declared a record dividend. We are continuing to realize the significant benefits of our sizable operating leverage, strong balance sheet and industry low breakeven levels that have enabled Genco to increase its earnings power and dividend capacity. We are operating in a strong rate environment and asset values have continued to increase, which together with strong cash flow generation has contributed to Genco's increasing net asset value. As we look ahead, Genco is well positioned to continue driving returns through sizable dividends and creating value for shareholders.

This concludes our presentation, and we would now be happy to take your questions.

Operator

[Operator Instructions]. Your first question comes from the line of Omar Nokta with Clarksons.

Preguntas y respuestas

Omar Nokta

Yes. So things have been moving quite favorably here in the spot market over the past several quarters. I guess, we're going on a year now of elevated rates in the sector. And how about maybe a -- 2 questions, maybe one specifically on the market, and I wanted to ask about Genco specifically. We've seen here recently, Capes having jumped maybe early back in September, they reached $50,000 a day kind of eased back a bit found the floor of $30,000 and they seem to be toggling maybe within this range. I guess, does that surprise you what we've seen with rates and then being able to establish a floor at this higher level at least relative to what we've seen over the past several years? And how do you think that -- what that tells us about the market? And how do you think the setup is as we look into 2027?

John Wobensmith

Yes. So I would tell you what that points out is how tightly balanced, particularly the Capesize market is, but really the entire dry bulk market. From September to where we are today, there were mostly weather-related events that affected the iron ore trade, particularly in the southern system in Brazil with a lot of wet weather. So that definitely brought deliveries down. But Vale has -- they put out their end of the year guidance which while it was on the low end, it still shows increased iron ore imports on a year-over-year basis.

So our view is that it was fairly weather related. There is some fuel issues in terms of being very high. So I think there's an incremental 10 million to 15 million tonnes from small iron ore producers in Brazil that cut back on shipments. But as we see these bunker prices come down, margins are starting to open up again. But it's really in the end of the day, you look at the growth in the bauxite trade. You look at Simandou that has been ramping up earlier than anticipated, and I think that has really helped establish a floor with the backdrop of a low supply situation on the vessel side.

Omar Nokta

Thanks, John. That's really good. And maybe just kind of perhaps Genco-specific, you've been obviously no stranger to acquiring tonnage as you highlighted in your opening comments. You've been doing it methodically really in at your own pace the past several years. You've got plenty of liquidity. And then just wanted to kind of ask as you think about, because you noted asset values continue to rise, what do you think in terms of deploying more capital into the secondhand market? Is there an opportunity there, you think, and especially in, say, the sub-Cape segment, you've got the 9 remaining Supras, they're somewhat older. How do you think about scaling out of those and maybe using that capital to redeploy perhaps in Ultra or you go more top heavy with the Capes? Any color you're able to give on that?

John Wobensmith

Yes, sure. I mean, look, you saw what we did early in the year. We divested 2 older Supras and redeployed that into a modern Cape, very creative trade. Those are deals that we will do all day long, right? But not always available. It's still I think a tight market to find modern Capesize, but they are out there. It was another 2019 that was just sold over the last 2 days to another owner.

So I still think liquidity is there in terms of ships. When you look at Genco specifically, we're definitely going to continue to execute on the fleet renewal side. We still have, I would say, a bias towards the larger ships, but the midsized ships are very important to maintaining cash flows and dividends because of the stable earnings. So I would look at it as what's the opportunity at the time with the bigger picture that we will continue to do fleet renewal.

Operator

Your next question comes from the line of Liam Burke with B. Riley Securities. Please go ahead.

Liam Burke

John, you did have -- you did pay for the last Cape and your debt levels are higher, though, low by relative standards. Traditionally, you've always -- you have been paying back debt faster than the normal amortization rate. Do you see any need to do that, especially with asset value so high here and you may not be able to step in and add assets with the market the way it is?

John Wobensmith

Well, so asset values have gone up. They've gone up though across the board, right, not just the new ships, the older ships have moved up significantly as well. So there is a trade there that can benefit the fleet renewal side. So it has to -- again, we have to have discipline as we're looking at transactions. The debt side, I'll let Pete comment on this, but we have a revolving credit facility. So we're actually managing our interest rate risk. Do you want to...

Peter Allen

Yes, sure. Thanks, John. So yes, Liam, we drew down in Q3, $50 million to fund the balance of the acquisition in August. We look at the revolver availability of $300 million in our cash, it's relatively fungible. We do try to manage interest expense. As you saw in Q3, our cash did build to $95 million. So you could see us toggle between the cash and debt paydowns in Q4. But overall, a lot of financial flexibility over $400 million or close to $400 million of total liquidity. So our debt balance has increased moderately, but we're still at an 18% net loan-to-value position. So still low leverage and no mandatory debt amortization at the current time.

Liam Burke

Yes. Well, your debt levels are very low. I have -- I think this question is for Michael. You were talking about iron ore imports in China are up. But if I'm looking at year-to-date China steel production, it's down about 3%. How do we reconcile increased iron ore demand with lower production levels?

Michael Orr

Well, Liam, partially, it's also a reduction in domestic iron ore output. China has had to increase their seaborne imports because of lack of domestic output, which is typically much lower ferrous content in the import, much higher ferrous content seaborne imports from places like Brazil and Australia.

Liam Burke

So this is a trend that will continue beyond just this year. I mean this is more of a structural change in iron ore demand for China steel and it's somewhat less sensitive to production levels.

Michael Orr

Yes. And you can see that they've also been reaching out to Guinea with extremely high ferrous content and sourcing much more from the seaborne market at the expense of its domestic output.

John Wobensmith

And then, Liam, we've also seen growth in some of the, at least right now, smaller areas, Vietnam continues to import higher numbers on the iron ore front. And when we look at India, because of the low ferrous content in their iron ore, we actually -- and they're large growth on the steel production side, we actually think you could see a scenario over the next few years where India is importing more and more high-quality iron ore.

Liam Burke

Great. Thank you very much.

Operator

[Operator Instructions]. There are no further questions at this time. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.