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Middle East trades could help give dry bulk a lift

Middle East trades could help give dry bulk a lift
Some 150m tons of bulk trades in and around the GCC is giving the ailing global dry bulk sector a fillip at its lowest ebb.

Major regional trades include inbound grains, outbound iron ore, especially from Iran, outbound fertilisers and inter-Gulf aggregates, a consultant close to the regional dry-bulk market based in the Gulf told Seatrade Maritime News.

“In terms of absolute numbers, this region would never be able to match regions like China or Australia. However, I think it generates close to 150m tons. If you look at the bulk trade, the majority, close to 60-70%, is grain, coal and iron ore,” he said.

Minor-bulks such as limestone and gypsum leaving Oman and inter-Gulf and outbound cement also make the GCC an important dry-bulk player, despite the lack of major plays passing through the region.

"It needs to be highlighted that the Gulf market is more important for ultramax and supramax owners and less so for panamaxes and larger sizes,” he said.

“Many grain imports still need geared tonnage and are therefore in supramax or ultramax parcels, and a large percentage of other major and minor trades require geared vessels. “

Inbound grains now total around 50m tons a year, with Saudi Arabia making up nearly a third of the regional market, and Iran accounting for another 20%. Saudi Arabia’s domestic grain production all but ceased in 2015, to save water.

National Shipping Company of Saudi Arabia (Bahri) is well into a planned move into dry bulk. It already owns five 80,000-plus dwt bulk carriers. The source said that the Saudi company was investing $1.5bn in the dry bulk sector at the moment.

“They have decided that this is the bottom of the market, and are acting on a complete global dry bulk play. They want to become major players, not only in Saudi Arabia. They see it as an anchor investment going forward,” he said.

In the past five years, Iran’s iron ore exports exceeded 15m tons. In 2014, Saudi and Qatari fertilizer exports exceeded 8m tons, and combined exceeded two-thirds of regional exports of 22.9m tons.

Inter-Gulf aggregates amount to expected movement of about 10m tons annually. “Qatar Primary Materials Company (QPMC) has secured the supply of 20m tons of high quality aggregates (gabbro and limestone) over the next three years from various sources, through four agreements,” he said.

Of late, there is increased interest in the Gulf market from number of players. Some of the new entrants to set up shop in Dubai of late are Norway's Eastern Bulk Carriers, Thailand’s Thoresen Shipping, Taiwan's NMC Logistics International Co., Germany's Oldendorff Carriers GmbH (expansion), with visits by many operators like Ultra Bulk and Lauritzen Bulkers, both of Denmark.

“Of course, in absolute terms, 150m tons is not much when one compares that to volumes moved in Capesize or larger sizes, but the quantity assumes significance when it is shipping in smaller sizes and with geared vessels. This is a market which still offers some value.”