젠코 시핑(GNK) 2026년 3분기 실적 발표 콘퍼런스콜: 사상 최대 1.05달러 배당

핵심 요약

• 젠코 쉬핑 앤 트레이딩(Genco Shipping & Trading Limited)은 2026년 3분기 순이익 3,800만 달러, 조정 순이익 3,920만 달러를 기록했다고 발표했다.
• 조정 EBITDA는 정기용선환산(TCE) 운임이 73% 상승한 일일 2만 7,539달러를 기록함에 따라 전년 동기 대비 200% 이상 증가한 6,810만 달러를 기록했다.
• 이사회는 2026년 2분기 대비 31%, 전년 동기 대비 600% 증가한 주당 1.05달러의 분기 기준 사상 최대 배당금을 결의했다. 이는 젠코의 29분기 연속 배당이다.
• 4분기의 경우 입거 수리 관련 자본지출을 제외한 선박당 일일 예상 현금흐름 손익분기 운임이 약 1만 500달러인 데 비해, 보유 가용 일수의 66%가 일일 약 3만 100달러에 계약 확정됐다.
• 경영진은 현재 체결된 계약과 현 포워드 운임 계약(FFA) 곡선을 전제로 4분기 배당금이 주당 1달러를 웃돌 것으로 전망했으며, 이에 따라 연간 총 배당금 전망치는 주당 3.20달러를 상회하게 된다.
• 젠코는 현금 9,500만 달러와 미인출 회전신용 한도 3억 달러를 포함해 4억 달러에 달하는 가용 유동성을 확보하며 이번 분기를 마감했다.

주요 재무 데이터

사업 및 운영 실적

젠코는 2019년 건조된 케이프사이즈 선박인 젠코 볼런티어(Genco Volunteer)호를 8월에 인도받은 후 총 44척의 선박을 운용했다. 전체 선대는 케이프사이즈 및 뉴캐슬맥스 선박 20척과 울트라맥스 및 수프라맥스 선박 24척으로 구성되어 있다.

경영진은 젠코 볼런티어호가 케이프사이즈 스폿 시장에 즉시 투입되어 발틱 케이프사이즈 지수(BCI) 대비 프리미엄 운임을 확보했다고 밝혔다. 젠코는 2023년 이후 프리미엄 수익을 창출하는 케이프사이즈 및 뉴캐슬맥스 선박에 4억 800만 달러를 투자했다. 2021년 가치 전략 도입 이후 현대식 고사양 선박에 대한 총투자액은 5억 5,700만 달러에 달했다.

회사는 대형선의 높은 영업 레버리지와 마이너 벌크 선박의 보다 안정적인 수익 구조 간 균형을 지속적으로 유지하고 있다. 척수 기준으로는 케이프사이즈 및 뉴캐슬맥스 선박이 전체 선대의 45%를 차지하지만, 지난 2년간 순매출에서 케이프사이즈 선박이 차지한 비중은 50%를 상회했다.

경영진은 선대의 수익 민감도를 수치화해 제시했다. 전체 선대의 TCE 운임이 1,000달러 상승할 때마다 주당 순이익 및 배당 여력이 약 0.36달러 증가한다. 아울러 20척의 케이프사이즈 및 뉴캐슬맥스 선박의 TCE 운임이 5,000달러 상승하면 주당 약 0.81달러가 증가한다.

건화물선 운임은 견조한 철광석 물동량, 서아프리카산 보크사이트 수출 증가, 시만두 철광석 선적 본격화, 석탄 수요 회복에 힘입어 지지를 받았다. 발틱 케이프사이즈 180 지수는 3분기 일평균 4만 1,000달러를 상회하며 2021년 이후 분기 기준 최고치를 기록했다. 발틱 수프라맥스 지수 역시 일평균 1만 9,000달러를 웃돌며 2022년 이후 최고 수준을 나타냈다.

경영진 가이던스

젠코는 4분기 보유 가용 일수의 66%를 일일 약 3만 100달러에 계약 확정했다. 경영진은 4분기 TCE 운임이 전년 동기 대비 70% 가까이 상승하며 2021년 4분기 이후 최고치를 기록할 추세라고 밝혔다.

현재까지 확정된 4분기 계약과 연말까지의 현 포워드 운임 계약 곡선을 바탕으로, 경영진은 2분기 연속 주당 1달러를 웃도는 배당금을 전망하고 있다. 이에 따라 2026년 연간 배당금 전망치는 주당 3.20달러를 넘어서게 된다.

회사는 선대 현대화를 지속할 계획이다. 경영진은 대형선 선호를 유지하면서도 안정적인 현금흐름과 배당을 뒷받침하는 데 중형선 역시 중요하다고 강조했다. 자본 배치는 가용한 기회와 거래 원칙에 따라 이뤄질 예정이다.

리스크 요인 및 점검 사항

• 경영진은 시장의 수급 기반에 대한 긍정적인 시각에도 불구하고 건화물선 운임의 변동성이 이어질 것으로 전망하고 있다.
• 브라질의 우천 기후로 최근 철광석 출하량이 감소했으며, 높은 연료비와 운임은 브라질 소규모 생산업체들에 부담을 주었다.
• 선가 상승으로 현대식 케이프사이즈 선박 인수 기회가 제한될 수 있으나, 노후 선박 가격 강세는 자산 매각 및 선대 현대화 거래에 긍정적으로 작용할 수 있다.
• 엘니뇨에 따른 파나마 운하의 통항 용량 제약은 북미 곡물 운송 시즌 동안 운항 경로에 차질을 초래해 항해 거리를 늘리고 선대 비효율을 심화시킬 가능성이 있다.
• 2026년 첫 9개월 동안 건화물선 선대의 순증가율은 3.9%였다. 경영진은 기존 선대의 12%가 선령 20년 이상으로 향후 교체 수요를 촉발할 잠재력이 있다고 지적했다.

애널리스트 질의응답(Q&A) 주요 내용

애널리스트들은 최근 케이프사이즈 운임이 구조적으로 높아진 시장 바닥 수준(floor)을 의미하는지 질문했다. 존 워벤스미스(John Wobensmith) CEO는 이러한 견조함의 요인으로 타이트한 수급 균형, 서아프리카산 보크사이트 선적 증가, 예상보다 빠른 시만두 광산의 생산 확대, 제한적인 선박 공급을 꼽았다. 그는 또한 벙커유 가격 하락이 브라질 소규모 철광석 수출업체의 마진을 개선할 수 있다고 말했다.

선대 전략과 관련해 경영진은 앞서 노후 수프라맥스 선박 2척을 매각하고 해당 자본을 현대식 케이프사이즈 선박에 재투자한 점을 언급했다. 젠코는 대형선과 중형선 도입 기회를 모두 검토하면서 선대 현대화를 이어갈 방침이다.

레버리지와 관련해 피터 앨런(Peter Allen) CFO는 젠코가 8월 선박 인수의 잔금을 지급하기 위해 3분기에 5,000만 달러를 인출했다고 밝혔다. 회사는 이자 비용 관리를 위해 현금 유보와 부채 상환 사이에서 균형을 맞출 수 있으며, 회전신용 구조가 유연성을 제공할 뿐 아니라 현재 의무 분할상환 규정이 없다고 덧붙였다.

경영진은 중국의 철광석 수입 증가와 철강 생산 감소 간의 괴리에 대해서도 설명했다. 이러한 추세는 중국 국내 철광석 생산 감소와 함께 호주, 브라질, 기니 등에서 생산된 고품위 해상 운송 철광석의 사용 증가에 일부 기인한다고 분석했다. 또한 베트남과 인도를 고품질 철광석의 잠재적인 추가 수요처로 지목했다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

질의응답

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.