According to Suzhou Cosc Marine Machinery, although the dry‑bulk shipping market has shown signs of a rebound over the past few weeks, survey results indicate that most market participants do not believe the rebound will be sustained.
The currently sluggish global dry‑bulk shipping market is expected to take at least three years to stage a recovery.
While signs of a rebound have emerged in the dry‑bulk shipping market in recent weeks, surveys show that most participants doubt the sustainability of such a rebound. In terms of dry‑bulk shipping demand, Suzhou Cosc Marine Machinery regards China as the most critical factor, whereas excess shipping capacity remains the dominant problem plaguing the dry‑bulk sector.
Approximately 73 % of ship‑owners stated that the market will take three to five years to recover, and around 41 % of charterers expect no improvement within the next two years. Nevertheless, both groups agree that freight rates will not rebound within the coming twelve months.
The primary cause of the current dry‑bulk market slump lies in excess capacity. More than half of the respondents identified this as the key barrier to market recovery. Despite reasonable growth in global demand for major commodities, the dry‑bulk shipping market remains oversupplied.
Numerous respondents pointed out that bulk‑carrier demolition constitutes a major driving force for market recovery, with as many as 39 % calling for more demolition of ageing bulk carriers.
Some 41 % of respondents believed that certain dry‑bulk sub‑segments have dragged down the whole industry. When asked about any exception among these sub‑segments, 39 % picked Capesize bulk carriers.
Eco‑friendly vessels are now seen as favourites in the dry‑bulk market, yet no respondent offered any notable insights regarding eco‑ships. Forty‑three percent held that marginal benefits brought by eco‑vessels are insignificant, since low prevailing bunker‑fuel prices limit fuel‑saving gains. On the other hand, 54 % of respondents thought lower bunker‑fuel prices benefit both ship‑owners and charterers.
Panamax Bulk Carriers to Become Mainstay
Suzhou Cosc Marine Machinery believes that ship‑owners operating trans‑Atlantic routes in the bulk‑carrier market are expected to see improved profitability in future. These operators have suffered negative impacts over the past two years from surplus tonnage and shifts in mineral‑cargo demand patterns.
Koske Marine Machinery noted that Panamax bulk carriers have long suffered depressed freight rates due to reduced US thermal‑coal exports to Europe, falling bunker‑fuel prices and abundant market capacity. Although short‑term prospects remain gloomy amid rising global fleet capacity in the coming two years, the medium‑term outlook for Panamax vessels is expected to turn positive after 2018.
Furthermore, Suzhou Cosc Marine Machinery indicated that massive new‑ship deliveries in 2015‑2017 in the new‑building market stem largely from delayed orders placed during 2010‑2012. Meanwhile, poor financial performance has discouraged ship‑owners from further fleet expansion, and a considerable share of ageing Panamax tonnage is available for demolition. Consequently, the global Panamax fleet is projected to become younger with reduced overall capacity, which will ease pressure on ship‑owners and push freight rates upward.