Dry Bulk Shipping Set for Further Recovery
Dry bulk shipping is expected to continue its recovery, thanks to declining excess capacity, increasing iron ore shipments and rising grain trade, according to the latest edition of the Dry Bulk Forecaster, published by shipping consultancy Drewry.
The dry bulk market rebounded in the third quarter thanks to the encouraging performance of the Capesize segment, which thrived on strong demand for iron ore from China and high production in Brazil. China’s hunger for imported ore led to a 25% increase in the Baltic Dry Index during the third quarter.
However, the Ebola virus outbreak has reduced the number of vessel calls at West African ports, which has disrupted export shipments of major cargoes such as bauxite, aluminium and iron ore from the mineral-rich region.
“China’s import demand is likely to drive the iron ore trade over the next few years, while animal feeds and oilseeds are expected to lead the grain trade,” said Rahul Sharan, Drewry’s Dry Bulk shipping lead analyst. “Meanwhile, the overall grain trade will remain low in the last quarter of the year because of seasonal factors.”
Drewry forecasts that the dry bulk shipping fleet will grow at 5% annually in this year and the next, to reach 790 million dwt at the end of 2015. This is a much slower pace than in previous years and is expected to continue over the medium term.
“We expect the dry bulk shipping market to improve gradually, on the back of strong long-term demand for iron ore shipments, coupled with moderating growth in the fleet,” continued Sharan. “One-year time charter rates are expected to rise over the next five years, which will act as a stimulus for cash-rich shipowners to acquire more vessels in order to reap the benefits of higher earnings. However, there remains the danger that a brighter market outlook might spur a new ordering spree, which would risk undermining the stability of the trade.”
The Source: http://www.drewry.co.uk/