Splash readers have dry bulk pegged as the most improved sector in 2017, the second best performer, just pipped by LNG carriers, in an ongoing poll. Unfortunately, analysts at the UK’s Maritime Strategies International (MSI) are far less optimistic when it comes to dry bulk.
The dry bulk market’s strong end to 2016 is unlikely to last long into 2017, MSI claims in a recent report.
MSI is predicting a depressed year for rates in 2017, a year it reckons is marked by multiple risks to recovery.
Will Fray, senior analyst at MSI, said a combination of factors will continue to shape the market during 2017, but in general, rates will remain depressed.
“In our base case there is little to suggest any significant changes to the market through the remainder of 2017 and it is MSI’s view that freight rates will remain depressed. Overall, we forecast deadweight demand growth will broadly match supply growth at around 3-3.5% year on year. On this basis we see little reason for freight rates to move meaningfully, other than for short-lived or localised spikes,” he said.
MSI is marginally more positive for smaller geared bulkers, but marginally more negative for the larger vessels than earlier forecasts, based on year to date earnings data.
“In the longer-term, our forecasts for 2018 and beyond are still positive but have come down since our last update, mainly as a result of a slightly more bearish view of Chinese steel production, iron ore imports and European coal imports,” Fray said. “We see very little room for supply-side adjustments to compensate given our already-weak contracting and strong scrapping base case forecasts. On average we have lowered our 2018-20 timecharter rate forecasts by 8-10% from our Q3 report.”