The dry bulk market has continued to be depressed, although some signs of a tentative rebound were evident during last week’s trading. In its latest weekly report, ship broker Allied Shipbroking said “a glimmer of hope would emerge in the dry bulk market last week, as a surge in iron ore shipments from Australia and Brazil helped the Capesize market. to escape from the levels of stagnation that I had”. Been stuck since mid July. This increase in shipments was notable given that we saw a weekly increase of over 17% from Australia and just over 32% from Brazil. However, as this positive effect is still in its infancy and it is too early to classify as a trend reversal, the market still remains at fragile levels and is still stuck at depressed charge levels on par with those seen at the beginning of the first Covid. -19 wave back in 2020, as well as in the depressed spring market of 2016”.
According to George Lazaridis, Head of Research and Valuations at Allied, “At such low yield levels, it’s only natural that overall market sentiment has taken a considerable hit in recent months. At the same time, looking at the overall fundamentals on the demand side, there is still a great deal of uncertainty about what to expect from the market going forward, while there is still a considerable level of market risk stemming from poor economic indicators. of the G20 economies, especially as to what to expect during the last quarter of this year and the first quarter of 2023. Despite the strong correction that was seen during the second half of July and most of August, many in the market they are still clinging to the fact that the fundamentals on the supply side of tonnage are healthy. Based on the current order book, the expected levels of fleet growth are assumed to be at a historically low level.”
Mr. Lazaridis added that “the initial loss of momentum in the market was seen in early summer when China, the world’s largest steel producer, faces a series of disruptions to steel production as it tries to address a surge in cases. of Covid-19 through a renewed lockdown. measures in the main cities and provinces. This problem was exacerbated considerably as the country sought to address problems brought on by severe drought and power outages, which in turn caused a further drop in steel production figures. However, taking a more macro perspective, we see that there are considerably more entrenched issues that need to be addressed before the market can regain its health. The real estate market is still in a troubled state in China, while expectations of a rollout of stimulus measures that would help prop up the market are yet to manifest. Considering all these obstacles it faces, there is still great confidence that Beijing will implement more policies and stimulus measures to boost the economy and support the struggling real estate industry.”
“Despite all this, the rest of the dry bulk market seems to be doing much better. As supply chain disruptions continue to drive up grain, coal, and other smaller bulk trades, the smaller size segments have held up at much better levels, and their rates have remained relatively more buoyant thus far, although they have also faced a considerable drop. since May. The truth is that the positive tailwinds are still relatively working in their favour, despite the overall negative pressure facing deteriorating global economic conditions. As such, the entire focus is now firmly on what kind of relief plans central governments will put in place to tackle runaway inflation, protect consumers, and stave off the global recession we are currently seemingly headed towards.”
Nikos Roussanoglou, Hellenic Shipping News Worldwide