|Newport Shipping |
Group Chairman Harald Lone
low levels since the financial crisis in early 2009,” said Harald Lone, Chairman of Newport Shipping Group. “Strong supply growth combined with a decline in most of the major coal trades pushed spot earnings for Panamaxes to just above US$3000 per day in Q1 2014, well below operating costs.
The markets are still soft, with average spot earnings in 2014 down by 10% on 2013, with Panamax rates down as much as 22%.” Healthy demand and moderate supply growth, however, should result in an improved tonnage balance during the next couple of years. And although a spate of newbuild orders in the 2013/2014 period could prevent a near term rebound, “freight rates and ship values are likely to rise slowly then peak during the 2016/2017 period”.
“A fundamental and sustainable dry bulk market recovery is expected in the second half of 2015 and throughout 2016, when the total dry bulk market balance could peak at 88%, with peaks during the fourth quarter close to 92%,” Lone said. “Improved tonnage balance in 2015/2016 should drive up bulk freight rates.” Referring to Newport Shipping Group’s latest Dry Bulk Market Outlook report, Lone said that less ordering combined with an increase in scrapping is expected to result in a significant shift in the pace of fleet expansion as scrapping eats into new deliveries.
He said that dry bulk supply expansion has gone from 15% in 2011 and 14% in 2012 to 7.4% in 2013 and 5.3% in 2014. It is expected to be about 4.9% in 2015, although this in itself will not be sufficient to initiate a major dry bulk recovery during the next twelve months. Scrapping could eat further into the supply/demand balance, given that 28% of all vessels in the Handy segment, the main contender for demolition, will be twenty years old or more by 2017.