Product tanker supply/demand in dwt candidates is much lower than 4% of the fleet, and in fact only 2.3% of the drybulk fleet and

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1 Crude Products Drybulk Containers AXIA Research An American s view from Piraeus Shipping Weekly Market Overview This week, the British currency continued to move in the opposite direction as its stock market, as the British pound took a dive, hitting a new 3-year low of $.75 against the U.S Dollar on Wednesday, while the FTSE rallied over 4% before selling off slightly on Wednesday. On the data front, the preliminary Eurozone Manufacturing (PMI) rose to 5.6 in September, up from 5.7 in August, while in the U.S., the PMI came in at 5.5 in September down from 5. in August. Drybulk In China, iron ore imports rose.5% month over month to 8.5 million tons in September, although, Cape rates continued to weaken, down to $,773 per day from $3,849 last week, and Panamax rates lost ground as well, down 6.9% to $5,6 per day from $6,7 last week. Supramax rates were slightly up to $7, per day from $7,65 last week and Handysize rates fell by.7% to $6, per day from $6,7 last week. Crude tankers VLCCs were the big winners for the week as rates rose by 85.3% to $9,6 per day from $,58 last week, while Suezmax rates decreased 39.% to $3,435 per day from $38,397 per day. Aframax rates were down 3.6% to $,689 per day from $6,839 per day. Product tankers Further losses this week for the product tanker sector, with LRs down 8.5% to $3,7 per day from $4,66 last week, while LRs were down.% to $6,339 from $6,48 last week. MR rates sunk by 49.% in the Atlantic region to $3,755 from $7,37 last week, while MR rates in the Pacific declined as well to $8,95 this week from $9,96, and MR rates were down slightly by 3.4% to $,38 per day from $,46 last week. Containerships According to VesselsValue, the average age of Panamax containerships that have been scrapped was 6 years old over the past three months, down from 9.7 years during the second quarter, and well below the average useful life of 3 years that is the industry norm. To be fair, during better markets the useful life of vessels is typically longer than 3 years, so the long-term average may hold true, but any increase in scrapping is a good sign for the market. 6 October 6 Robert Perri, CFA Director Research robert.perri@axiacm.com Market Data Current Wk ago Δ w/w BDI (6.6%) S&P 5,6.7,7.4 (.5%) SCFI (9.4%) WTI crude % Iron ore (.%) Scrap rates % LIBOR (%) % Vessel earnings monthly trend Drybulk vessels supply/demand in dwt Class 6E 7E Fleet growth.6%.5% Demand growth.4%.% Interesting There is one thing that always gets my goat: When people talk about scrapping and assume an Crude tanker supply/demand in dwt average vessel life of 5 years, so that 4% of the fleet must be replenished annually to maintain the current fleet. That makes sense if the average age of the fleet was.5 years and the orderbook was consistent every year, but we all know that is simply not true. This is more pronounced in drybulk where the average age of the fleet is 8.6 years versus. years for the Fleet growth Demand growth 6E 5.9%.6% 7E 4.%.3% tanker fleet but both are skewed towards newer vessels. Given this, the number of scrap Product tanker supply/demand in dwt candidates is much lower than 4% of the fleet, and in fact only.3% of the drybulk fleet and 6E 7E.8% of the tanker fleet is currently older than 5 years, with an average of.% and.8% per Fleet growth 4.7% 3.% year of the drybulk and tanker fleets, respectively, reaching scrapping age over the next five Demand growth 4.5% 4.% years. However, when the markets are poor the average age of scrapping candidates decreases, so we can include a percentage of vessels between -5 years as scrapping candidates (and Containership supply/demand in teu even 5-9 year old vessels in certain circumstances). For drybulk, we can assume 5% of the 6E 7E vessels between -4 years (5.% of the fleet) and 5% of vessels between 5-9 years (7.8%) Fleet growth 3.9% 3.7% are scrapping candidates, then we can determine that 6.8% of the fleet could be scrapped over the next year, which is good news for the market although based on our estimates the market Demand growth.4% 3.8% is closer to % oversupplied, so we would need to see at least % of the fleet get scrapped Source: Bloomberg, Baltic Index, AXIA Capital Markets before we are in an improved market. For Tankers, 6.% of the fleet are scrapping candidates, as only 4.% of the fleet is aged -4 years, while 3.4% is between 5-9 years, so despite the recent drought of scrapping, the tanker market has a better potential to fix itself sooner. Please continue to overleaf AXIA Capital Markets LLC, 645 Fifth Avenue, Suite 93, New York, NY Tel: , Fax: , Web: Please refer to the last page for disclosures and analyst certification

2 Company news Euronav (EURN) On October 5 th, EURN announced it ordered two Suezmax tankers which will be built at Hyundai Heavy Industries (HHI) for delivery in 8 on the back of a seven-year time charter agreement with Valero Energy starting shortly after delivery. These tankers are Ice Class C while have substantially increased steel structure and specific emission controls to meet the specific requirements of the time charter. Costamare Inc. (CMRE) - On October 4th, CMRE announced that it will cut the dividend on the common stock to $. per share compared to $.9 per share paid in previous quarters. In addition, it entered into a new $87. million loan facility to finance its third and the fourth, TEU vessels purchased through its JV with York, and will be repayable over 3 years. Furthermore, CMRE refinanced two other loan agreements to reduce its upcoming balloon installments so it now has no balloons in 7, and reduced its balloon installments in 8 to $8 million from $44 million. Scorpio Bulkers, Inc. (SALT) On October 3 rd, SALT announced that it has reached agreement with certain shipyards to reduce the contract price under the shipbuilding contracts of four Kamsarmax vessels and two Ultramax vessels by an aggregate amount of $3. million, plus delayed the deliveries of the same vessels by approximately one to three months each. The vessels previously expected to be delivered between September 6 and November 6 will now be delivered between October 6 and January 7. Pursuant to these delays, $59. million that was previously expected to be paid to shipyards during the fourth quarter of 6 is now expected to be paid in the first quarter of 7. Safe Bulkers, Inc. (SB) On October 3 rd, SB announced it agreed to novate an existing newbuilding contract for Hull No.S835, a Japanese Panamax vessel, and sell upon delivery, Hull No. 55, a Japanese Kamsarmax vessel, both scheduled to be delivered in Q7, to entities owned by Mr. Polys Hajioannou, the Chairman of the Board and the CEO of SB. Mr. Hajioannou will pay an aggregate amount of $46. million for both vessels, $.5 million for Hull No. S835 and $4.5 million for Hull No. 55, respectively. As a result of the transactions, SB will record an aggregate non-cash impairment loss of $6.6 million in the third quarter of 6 for instalments already paid for the vessels. Chart of the week Only.3% of the drybulk fleet is older than 5 years, and 7.5% is older than years, while the tanker has less than 6.% of its fleet that is older than years Exhibit : Drybulk and tanker fleets by year of delivery (in millions of dwt) Source: Baltic Index AXIA Capital Markets LLC Page

3 $ per day 5 year-old asset value (in USD m) Drybulk Cape rates were down this week, with Supramaxes gaining a little ground Table : Drybulk earnings Capesize Panamax Supramax Handysize Source: Baltic Exchange, AXIA Capital Markets Spot, FFA and time charter rates % Δ Current Wk ago Mo ago Yr ago Wk ago Mo ago Yr ago Spot,773 3,849 7,459 3,3 (7.8%) 7.% (3.3%) 4Q6,873,86 9,999 4, % 8.7% (7.5%) FY7 8,559 8,55 8,44,58.%.4% (9.%) yr T/C 8,75 8,75 8,75,5.%.% (3.%) Spot 5,6 6,7 5, 5,67 (6.9%) 9.4% (.%) 4Q6 6,37 6,5 6,53 7,796 (.%) (4.%) (.%) FY7 5,775 5,799 5,734 7,63 (.4%).7% (8.%) yr T/C 6,75 6,675 6,3 8,.% 7.% (5.6%) Spot 7, 7,65 7,5 7,4.6% (5.4%) (.%) 4Q6 7,5 7, 7, 7,33.6%.4% (.8%) FY7 6,9 6,3 5,95 7,67 (.%).% (6.%) yr T/C 7,5 7,5 7,5 8,5.%.% (4.7%) Spot 6, 6,7 6,68 5,575 (.7%) (.6%) 7.8% 4Q6 5,89 5,95 5,79 6,488 (.4%).7% (9.%) FY7 5,44 5,3 5,56 6,75.3% (.%) (5.3%) yr T/C 6,5 6,5 6,5 7,.%.% (.7%) Exhibit : Capesize average daily earnings 5,, 5, Exhibit 3: Capesize 5-yr asset values vs yr t/c rates 8 6 4, 8 6 5, 4 Today: $4.m/$8,75 Historical Unlevered IRR :.9% Current Unlevered IRR : (.%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5,, 5,, year avg. One-year time charter rates (in USD per day) Source: Baltic Index Source: Baltic Index, Clarkson Research Services Limited, AXIA Capital Markets Unlevered IRR is calculated using current 5 yr old asset values, assumes the vessel earns the yr t/c rate for five yrs, then sold after yr 5 at a price equal to the yr avg value of a yr old vessel All calculations are the same, except the vessel is sold at a price equal to today s value for a yr old vessel after five yrs AXIA Capital Markets LLC Page 3

4 $ per day 5 year-old asset value (in USD m) Crude tankers VLCCs continue to recover, while Suezmaxes and Aframaxes both weakened Table : Crude tanker earnings Spot and time charter rates % Δ Current Wk ago Mo ago Yr ago Wk ago Mo ago Yr ago VLCC Spot 9,6,58 9,9 84, % 97.8% (76.8%) yr T/C 6,5 6,5 7,75 3,5.% (4.5%) (3.%) 3 yr T/C 7, 7, 9,5 34,.% (7.7%) (.6%) Suezmax Spot 3,435 38,397 6,878 39,3 (39.%) 4.7% (4.4%) yr T/C,5,5,75 36,.% (.3%) (4.%) 3 yr T/C,875,875 3,375 33,5.% (.%) (3.7%) Aframax Spot,689 6,839 7,8 9,98 (3.6%) 6.8% (6.%) yr T/C 6, 6, 8, 3,.% (.%) (46.7%) 3 yr T/C 7,5 7,5 8,875 6,75.% (8.6%) (35.5%) Source: Baltic Exchange, Clarkson Research Services Limited, AXIA Capital Markets Exhibit 4: Aframax average daily earnings 7, 6, 5, 4, 3, Exhibit 5: Aframax 5-yr asset values vs yr t/c rates , 3, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec year avg. Today: $3.5m/$6, Historical Unlevered IRR : 7.% Current Unlevered IRR : (.8)%,, 3, 4, 5, One-year time charter rates (in USD per day) Source: Baltic Index Source: Baltic Index, Clarkson Research Services Limited, AXIA Capital Markets Unlevered IRR is calculated using current 5 yr old asset values, assumes the vessel earns the yr t/c rate for five yrs, then sold after yr 5 at a price equal to the yr avg value of a yr old vessel All calculations are the same, except the vessel is sold at a price equal to today s value for a yr old vessel after five yrs AXIA Capital Markets LLC Page 4

5 $ per day 5 year-old asset value (in USD m) Product Tankers The product tanker market continues to underperform, with MRs being the losers this week Table 3: Product tanker earnings LR (TC) LR (TC5) MR MR Spot and time charter rates % Δ Current Wk ago Mo ago Yr ago Wk ago Mo ago Yr ago Spot 3,7 4,66 6,453,48 (8.5%) (77.4%) (8.8%) yr T/C 7,5 7,5 8,75 3, (.4%) (8.%) (4.5%) 3 yr T/C 8,5 8,75 9,65 6,5 (.7%) (7.%) (3.%) Spot 6,339 6,48,839 3,865 (.%) (5.6%) (54.3%) yr T/C 5, 5, 5, 7,.%.% (44.4%) 3 yr T/C 5,65 5,65 6,5,5.% (3.8%) (3.6%) Atlantic 3,755 7,37 5,37 6,778 (49.%) (3.%) (77.6%) Pacific 8,95 9,96,84 7,436 (.%) (.5%) (48.9%) yr T/C 3, 3, 3,5 9,5.% (3.7%) (33.3%) 3 yr T/C 4,5 4,5 4,5 7,5 (.6%) (.6%) (9.3%) Spot,38,46 3,,73 (3.4%) (8.%) (45.5%) yr T/C,,,75 7,5.% (5.9%) (3.4%) 3 yr T/C 3,5 3,5 3,5 6,5.%.% (8.5%) Source: Baltic Exchange, Clarkson Research Services Limited, AXIA Capital Markets Exhibit 6: LR average daily earnings 45, 4, 35, 3, 5,, 5,, Exhibit 7: LR 5-yr asset values vs yr t/c rates , Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec year avg. Today: $3.m/$5, Historical Unlevered IRR : 4.7% Current Unlevered IRR : (.6%),, 3, 4, One-year time charter rates (in USD per day) Source: Clarkson Research Services Limited Source: Baltic Index, Clarkson Research Services Limited, AXIA Capital Markets Unlevered IRR is calculated using current 5 yr old asset values, assumes the vessel earns the yr t/c rate for five yrs, then sold after yr 5 at a price equal to the yr avg value of a yr old vessel All calculations are the same, except the vessel is sold at a price equal to today s value for a yr old vessel after five yrs AXIA Capital Markets LLC Page 5

6 $ per day 5 year-old asset value (in USD m) Containerships Rates for panama vessels continue to be under pressure Table 4: Containership earnings 9, TEU 6,8 TEU 4,4 TEU 3,5 TEU,5 TEU,7 TEU Time charter rates % Δ Current Mo ago Yr ago Mo ago Yr ago 3 yr T/C 5, 5, 36,.% (3.6%) 3 yr T/C 3, 3, 9,.% (3.6%) 6-m T/C 4,7 5,, (7.8%) (53.%) 5 yr T/C 9,5 9,5 3,.% (6.9%) 6-m T/C 5,5 5,5,.% (5.%) 6-m T/C 5,75 5,85 8,5 (.7%) (3.4%) 3 yr T/C 8,5 8,7, (.3%) (.7%) 6-m T/C 6,7 6,9 9, (.9%) (7.%) 3 yr T/C 7,9 8,,5 (.3%) (4.8%) Source: Clarkson Research Services Limited, AXIA Capital Markets Exhibit 8: 4,5 TEU average 6m-yr time charter rates 8, 6, 4,,, 8, Exhibit 9: 4,5 TEU 5-yr asset values vs yr t/c rates , 4,, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec year avg. Today: $.m/$4,7 Historical Unlevered IRR : 4.3% Current Unlevered IRR : (9.9%) 5,, 5,, 5, 3, One-year time charter rates (in USD per day) Source: Clarkson Research Services Limited Source: Clarkson Research Services Limited, AXIA Capital Markets Unlevered IRR is calculated using current 5 yr old asset values, assumes the vessel earns the yr t/c rate for five yrs, then sold after yr 5 at a price equal to the yr avg value of a yr old vessel All calculations are the same, except the vessel is sold at a price equal to today s value for a yr old vessel after five yrs AXIA Capital Markets LLC Page 6

7 Asset Values Asset values have stabilized this week Table 5: Vessel values Vessel price % Δ year over year Newbuild Resale 5 yr yr Scrap Newbuild Resale 5 yr yr Scrap Drybulk Vessels Capesize (.5%) (.7%) (3.4%) (3.%) (7.3%) Panamax (7.7%) (9.%) (.%) (33.3%) (7.4%) Supramax (9.%) (5.7%) (.9%) (4.3%) (8.6%) Handysize % (6.7%) (9.%) (8.9%) (9.%) Crude Tankers VLCC (.%) (8.%) (.5%) (5.5%) (9.4%) Suezmax (4.7%) (.8%) (7.9%) (5.%) (7.%) Aframax (5.%) (6.%) (7.8%) (3.%) (7.9%) Product Tankers LR (4.5%) (6.8%) (6.3%) (8.%) (7.9%) LR (.4%) (4.%) (.%) (.%) (8.%) MR (7.%) (.7%) (.7%) (7.5%) (8.6%) MR (.4%) (.4%) (8.4%) (.8%) (7.6%) Containerships 9, TEU (5.5%) (7.5%) (8.%) (8.%) (3.%) 6, TEU (5.6%) (7.6%) (8.%) (8.%) (3.%) 3, TEU (6.%) (8.%) (6.8%) (7.5%) (3.%) 9, TEU (6.7%) (.5%) (36.7%) (36.4%) (9.8%) 6,8 TEU (9.7%) (3.3%) (47.5%) (45.7%) (3.%) 4,4 TEU (4.7%) (.%) (5.%) (6.3%) (.4%) 3,5 TEU (6.3%) (5.3%) (44.4%) (6.%) (35.6%),5 TEU (.%) (8.%) (38.9%) (5.9%) (9.8%),7 TEU (5.%) (6.%) (3.8%) (35.%) (35.9%) Source: Clarkson Research Services Limited, AXIA Capital Markets For italicized prices are extrapolated by straight line depreciation to current scrap value using a 3 year average vessel life For newbuild and resale, price is for 4,8 teu post-panamax vessels, while second hand values are related to 4,4 teu panamax vessels 3 For newbuild and resale, price is for 3,8 teu post-panamax vessels, while second hand values are related to 3,5 teu panamax vessels AXIA Capital Markets LLC Page 7

8 AXIA Research Disclosures This communication is not research or a research report. It is for informational purposes and institutional clients only; it is not an offer or solicitation of an offer to buy or sell any security or instrument, or to make any investment. This material does not constitute investment advice because it does not take into account the particular investment objectives, financial situations, or needs of individual clients. Clients seeking investment advice specific to their financial profiles and goals should contact their professional advisors, including independent tax advisors. In reaching a determination as to the appropriateness of any proposed transaction or strategy, clients should undertake a thorough independent review of the legal, regulatory, credit, accounting and economic consequences of such transaction in relation to their particular circumstances and make their own independent decisions. The information and any opinions contained herein are as of the date of this material and AXIA Capital Markets ( ACM ) does not undertake any obligation to update them. All market prices, data and other information are not warranted as to the completeness or accuracy and are subject to change without notice. This communication is not a complete analysis of every material fact concerning any company, industry or security. ACM assumes that it will be read in conjunction with other available reports and data. Past performance is not indicative of future results, and no representation or warranty, express or implied, is made regarding future performance. No investor can assume that reliance on the views, opinions or recommendations contained herein will produce profitable results. Foreign-currencydenominated securities are subject to fluctuations in currency exchange rates that could have a positive or adverse effect on an investor's return upon the conversion into local currency of dividends or interest received, or proceeds from the sale of such securities. In addition, the value of U.S. dollar-denominated ADRs and the value of U.S. dollar-denominated ordinary shares, or common shares, of foreign issuers can be influenced by fluctuations in currency exchange rates. Clarkson Research Services Limited (CRSL) Clarkson Research Services Limited (CRSL) have not reviewed the context of any of the statistics or information contained in the commentaries and all statistics and information were obtained by AXIA Capital Markets LLC from standard CRSL published sources. Furthermore, CRSL have not carried out any form of due diligence exercise on the information, as would be the case with finance raising documentation such as Initial Public Offerings (IPOs) or Bond Placements. Therefore reliance on the statistics and information contained within the commentaries will be for the risk of the party relying on the information and CRSL does not accept any liability whatsoever for relying on the statistics or information. Insofar as the statistical and graphical market information comes from CRSL, CRSL points out that such information is drawn from the CRSL database and other sources. CRSL has advised that: (i) some information in CRSL s database is derived from estimates or subjective judgments; and (ii) the information in the database of other maritime data collection agencies may differ from the information in CRSL s database; and (iii) whilst CRSL has taken reasonable care in the compilation of that statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures and may accordingly contain errors; and (iv) CRSL, its agents, officers and employees do not accept liability for any loss suffered in consequence of reliance on such information or in any other manner; and (v) the provision of such information does not obviate any need to make appropriate further enquiries; and (vi) the provision of such information is not an endorsement of any commercial policies and/or any conclusions by CRSL; and (vii) shipping is a variable and cyclical business and any forecasting concerning it cannot be very accurate. AXIA Capital Markets LLC 645 Fifth Avenue, Suite 93 New York, NY, US Tel: Fax: Research & Sales Robert Perri, CFA - Director of Research