Capesize bulkers are now trading at their lowest levels since March 2016, the all-time low point for dry bulk shipping, slipping back into negative territory.
A new report from Danish Ship Finance stated that oversupply is shaping the capesize market with longer-period capesize fixtures indicating that the market is set to weaken even further.
Secondhand prices for both young and old capesize vessels are declining and are approaching the levels for panamax vessels.
“We believe older capesize vessels with low fuel efficiency are the most exposed to unemployment in the current distressed market…A sluggish demand outlook for both commodities highlights the future unemployment risk for capesize vessels. We expect demand for capesize vessels to decrease by 2.3% in 2020 and increase by 3.3% in 2021,” Danish Ship Finance stated in a new 80-page report.
One source of hope coming up the horizon is a likely large Chinese stimulus package. The National People’s Congress will convene on May 22 with reports emerging that a giant RMB10trn ($1.41trn) stimulus plan will be unveiled.
“The steel market is hoping that most of the package will deal with new infrastructure spending,” brokers Lorentzen & Stemoco noted in a report today.