From some of the lowest levels ever seen for dry bulk shipping the first half of last year there was a sharp rebound later in 2020, which has continued into 2021 and has seen the sector enjoying some its best earnings in a decade.
Setting the scene in a Marine Money webinar on Tuesday, Louisa Follis, Divisional Director, Dry Cargo, Clarksons Platou Asia said: “Average earnings for capes are up more than 300% even with the recent correction, for the rest of the dry bulk fleet we’re looking at growth in year-on-year average earnings of about 200% so really strong levels for the dry bulk sector.”
In particular Follis highlighted the demand for dry bulk coming the construction sector in Asia. “As the countries build their way out of Covid to catch up with lost work from last year, generate jobs, generate economic growth, this does mean more steel demand, cement demand, more aggregate demand, and it’s really helped support the steel complex,” she said.
“We’re experiencing real growth in seaborne trade for construction materials in Q1 this year compared to Q1 last and for Q2 its even stronger. We’re pretty much on track to see the 2019 volumes.”
The market could though be impacted new waves of Covid with for example Malaysia having recently entered full lockdown again.
William Fairclough, Managing Director, Wah Kwong Maritime Transport, noted that the smaller sizes had help from the container market, which is going through the biggest boom in its history with a severe shortage of capacity. “They’re having all sorts of cargo that would have been in boxes a year ago,” he said.
Asaf Malamud, CEO of Port Dragon Bulk (Portline Group) was positive about the outlook for the market ahead. “We like the fundamentals of the next two years going forward. We see good demand both from a general increase in economic activity and we see this across the board and see this really helping vessels that us on the panel own and operate, which is the supras and ultras.”
Follis did not make a forecast of where Clarkson Platou believe the market is headed, but rather noted that the market seemed to think current buoyant conditions were sustainable.
“We can see this certainly in vessel value assessments and also time charter rates. Certainly charterers are concerned they might get caught out with very high spot rates so taking in tonnage I understand for charterers has been a prudent move to try and avoid the spikes in the spot market. And really gives the feeling the support is going to last for a little while yet.”
Mats Berglund, CEO of Pacific Basin Shipping, however, commented that “you can’t book cargo long term at spot levels.” He noted that supramaxes at $25,000 a day and ultramaxes at $27,000 per day, and handy at above $20,000 day you can’t book long term cargo at these levels. “We like the spot and this harvest time and its been a long wait and fundamentals look good.”
Sounding a note of caution Berglund said: “I think it’s important to remember Covid is still not over, it’s still uncertain even though we are in a very strong market now.”
Copyright © 2022. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.