Dry bulk shipping market hits bottom, but is it time to invest?

Speaking on a panel at the BNP Paribas – Moore Stephens Singapore Shipping Forum 2016, John D’Ancona, director – dry analysts for Clarksons Platou said it was difficult for the market to get any worse, “but the issue is we’ve had a very difficult time in dry bulk”.

“It could be at the bottom, but how long does it stay at this level?”

A poll of the audience as to which markets had hit bottom showed that 51% thought that dry bulk has had hit that point.

The Baltic Dry Index hit an all time low of 290 points in February, but in recent weeks has rebounded to 669 points, although this is still below operating cost levels.

Robert Stenvik, chairman and senior partner of Via Mar agreed that the market was at a low point with capesizes at below operating costs. However, while the market would enjoy a seasonal boost in the second half of 2016, in the first half of 2017 the market could plateau and end up at levels “as bad as today”. As a result it would take till the second half of 2017 for real market recovery as steel demand picks-up.

Both D’Ancona and Stenvik urged the industry to continue scrapping more vessels.

As to whether it was the time to buy dry bulk ships a question mark remains. Anthony Zolotas, group ceo of Eurofin Group said: “Obviously the Greeks would buy as prices are at a very low level, but whether they are right is another question.”

D’Ancona said he was optimistic about dry bulk, but it needed to be defined what a “good market” was compared to the past. “We need to be more realistic in what we expect.”

He also warned, “There is still a huge amount of risk in dry bulk”.

Citing a possible example of such risks Stenvik said there was the possibility that China could decide to ban all imports of coal.