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Dry bulk shipping market outlook for 2024

After a disappointing year the dry bulk market picked-up in the last two months of 2023, but the question is will this upturn continue in 2024?

In the third part of our shipping market outlook series we are focusing on the dry bulk sector with Will Fray, a Director of Maritime Strategies International (MSI). Speaking to the Seatrade Maritime Podcast Fray said the upturn in rates was quite revealing about how tight balances were in the market.

You can listen to the full interview as a podcast in the player above

An expectation in 2023 that China would support the market through stimulus measures driving steel and iron ore demand did not happen. Instead, Fray says the market was saved by Chinese coal imports which largely accounted for incremental dry bulk trade last year.

“So what's happening right now is that the market is probably slightly tighter than maybe it should be and when we do have these inefficiencies creep in, then you can see situations where the spot markets respond very quickly,” he explains.

Looking into 2024 he said volatility will be a key driver but the question whether this will be an upward or downward trend.

Dry bulk demand in 2024

A repeat of China importing another incremental 150 million tonnes of coal as it did in 2023 is not expected as stockpiles are now very high. “So, we think China's coal imports are best or be flat next year, or more likely will start decline,” Fray says.

However, slower coal demand from China is seen as being offset by improvements in markets that performed very poorly in 2023 such as European and Japanese iron ore imports. “The demand side is not going to be stellar, but it's not going to be awful either, because there's going to be other sort of pockets of reemerging demand as China's cold trade starts to come off with it.”

Dry bulk ship supply in 2024

In 2023 newbuild deliveries outstripped scrapping with around 32 million dwt delivered but just 8 million dwt of tonnage sent to recycling yards. In 2024 around another 30 million dwt of new vessel capacity is expected to be delivered.

MSI expects market balances between demand and supply to be matched in a similar way that they were in 2023. “We can't see any strong trend upwards, we think the risk is probably more likely on the downside,” Fray says.

Freight rate outlook

Looking ahead in terms of freight rates for 2024 MSI expects spot markets broadly volatile with a flat trend while charter markets will weaken year-on-year having been quite positive at the start of 2023.

Potential impact of the Red Sea crisis

A growing number of vessels are diverting away from the Red Sea and transiting the Suez Canal and transiting via the longer route round the Cape of Good Hope. “We think in terms of tonnes miles growth it would be rather than 2% next year [2024] it would be 5% next year if that Suez Canal was closed off for the whole year,” Fray says. This would suggest higher rates for a longer term if the issue in the Red Sea is sustained.