The company’s core dry bulk business generated a net loss of US$87.6m compared to a net loss of $34.7m in 2015. "2016 was an extremely poor year for dry bulk shipping. Average market rates were even weaker than in 2015, dragged down in the first quarter by rates not seen for 45 years," chairman David Turnbull said in a stock market statement.
However it added that "conditions improved over the remainder of the year, and sentiment in the industry is recovering".
While Pacific Basin again outperformed the market in terms of vessel earnings and generated positive operating cash flow, given the weak market, it still produced a significant net loss.
Pacific Basin ceo Mats Berglund said: "Freight rates were undermined at the start of the year by the general seasonal slowdown in demand, lingering oversupply of dry bulk tonnage and reduced movements of coal."
He noted that freight earnings then improved over the remainder of the year, benefitting from increased South American grain exports in the second quarter and stronger US grain exports in the second half, as well as growth in trades such as cement into North America.
Berglund said Chinese industrial activity was significantly down at the start of the year, but improvements from March onwards drove a revival in the iron ore and coal trades and minor bulks such as logs, cement and copper concentrates in the remainder of the year.
"In this difficult environment, we generated average handysize and hupramax daily TCE earnings of $6,630 and $6,740 per day net, outperforming the BHSI and BSI indices by 34% and 14% respectively," Berglund pointed out.
Looking ahead, Berglund said: "2017 has started stronger than last year, and we believe the worst of the current market cycle is behind us and that supply-side corrections have begun to lay the foundations for an eventual market improvement.
"We believe 2017 will be better than 2016," he said, however Berglund reiterated that the group still expects "continued uncertain markets in 2017 and will continue to conduct our business efficiently and safely while astutely combining ships and cargoes to maximise our margins".
Berglund continued the usual mantra that market recovery needs lower net growth in the global dry bulk fleet. He noted however that negligible new minor bulk ship ordering and non-delivery of some existing newbuilding orders should help alleviate the situation somewhat in the next few years.
Pacific Basin is also joining other shipping related firms such as maritime law firm Ince & Co in moving out of costly offices in downtown Hong and will be relocating to more cost-effective premises in Wong Chuk Hang outside of the central business district in May.
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