London: Shipbroker and consultant Galbraith's Ltd says the worldwide dry bulk freight market is set to grow at an average rate of 2.5 per cent to 2010, in line with demand, and that fleet capacity is likely to grow by 24 per cent over the same period. An in-depth review and forecast entitled Dry Bulk Freight Outlook to 2010, published jointly by Galbraith's and Northfield Trading, looks at the major issues, drivers and circumstances which render the dry bulk market so volatile and difficult to predict. It estimates a growth in demand of 3.5 per cent for 2006, declining slowly over the remainder of the period, equating to a total growth of 335m tonnes per annum. Iron ore (100 m tonnes), steel products and steam coal account for 235m tonnes of this growth, with demand for iron ore and steam coal growing by more than 7.5 per cent. Total demand for dry bulk freight is forecast to grow from 2,689 m tonnes in 2005 to 3,024 m tonnes in 2010. The forecast increase of 24 per cent in fleet capacity - which is based on a 7.2 per cent growth rate in 2006, declining slowly over the remainder of the period - amounts to a total growth of 80m dwt. Carrying capacity is set to increase by about 680m tonnes, while scrapping is expected to remain at historically low levels throughout the forecast period.
The report notes that time charter and voyage rates are set to decline over the period as increases in carrying capacity outstrip increase in demand. The decline in rates, however, will be offset by continuing high oil and bunker prices, with bunkers historically forming a large percentage of time charter rates. And the increased size of both capesize and panamax newbuildings over the period will serve to increase productivity.
The report emphasises that a significant number of the panamax deliveries to be made over the next two years are vessels that are greater than 80,000 dwt that in the past would have been classified as capesize vessels. At the beginning of 2006, the average vessel size in the panamax fleet was around 72,000 dwt, but the average delivery size over the forecast period is approximately 80,000 dwt.
The capesize fleet at the beginning of 2006 averaged almost 170,000 dwt, but the average size of the vessels to be delivered is around 200,000 dwt. Given that these will be more energy-efficient and use fewer crew, the productivity increases that these vessels will deliver are not insignificant.
The report is based on a theoretical fleet carrying capacity determined by assuming that the average dwt fleet operating during the year achieves a level of eight voyages per annum. This is matched to the total cargo demand, actual and forecast volumes, for the same year in order to give a theoretical surplus/deficit.
Meanwhile, Norwegian broker Fearnleys reports soaring capesize rates, especially in the Atlantic where modern a 172,000 dwt ship achieved about US$79,000 daily for a trip from Brazil to the Far East. The main route from Tubarao to Beilun and Baoshan increased from about US$ 33.50 to US$ 37 per metric ton over the week. We experienced increasing rates for a transatlantic round voyage, where modern 172,000 dwt obtained USD 60,000 daily. [31/08/06]
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