HONG KONG: The dry bulk market’s future prospects rely on supply. As such, the news that global dry bulk fleet growth has all but retreated to much more sustainable levels must be seen as a positive reaction from the shipowners’ side. In its latest weekly report, shipbroker Intermodal noted that “while during 2014 the net fleet growth was about 5 percent, things definitely look much better in 2015. This January the dry bulk fleet was 9,396 vessels and on November 1st 2015, the vessel count was at 9,623; a fleet increase for the ten months of about 2.5percent. About 560 new buildings were delivered from the shipyards against 331 bulk carriers that have been taken for demolition to the scrap yards. Even though this is half of the fleet growth witnessed during 2014, it has not been enough to offset the drop in demand that we have experienced”.
Intermodal’s Newbuildings/SnP Broker, Mr. Theodore Ntalakos noted that “this year one of the main drivers of demand, or lack thereof, has been China’s, the world’s largest coal buyer, appetite for coal. The excess coal supply has weighed on prices, so for the first eight months of the year, coal imports were down 31 percent compared to last year. Lower coal prices made domestic coal more competitive and seaborne imports have been negatively affected. However, low prices also affected domestic producers many of whom decided to reduce their production to minimize losses. In this way, imports were re-balanced (which explains the freight rebound of July) but only until the seasonal demand peak has finished and foreign coal became even more expensive as a result of the Chinese currency devaluation, meaning that imports could decline further in the coming months”.
Ntalakos added that “back on the supply side, let’s go forward and try and take a view on 2016. What we must note first, is that back in January the dry bulk orderbook for 2015 only, was almost at 1,000 vessels and as mentioned we had about 560 deliveries in the ten months of the year. From experience, the 215 vessels that are supposed to be delivered in the remaining two months will, to a certain extent, be pushed into 2016. So, the supply weight is shifted into 2016 where the remaining of this year’s and an additional 879 bulk carriers are currently scheduled for delivery. Taking a statistical average 20-30 percent of slippage/cancellations and assuming that about 350 vessels will go for demolition (there are more than 900 vessels of more than 20 years old), then we are looking at another 2.7-3.6 percent fleet growth; with global growth projected by IMF at 3.6 percent any balance will be marginal”.