A re-balancing of the dry cargo market is likely to continue next year but both an unwinding of slow steaming and the possibility of further newbuilding orders could complicate the improving picture, says Clarksons Platou.
Henriette Van Niekerk, head of dry bulk analysis at the brokerage, says the 360% improvement in freight rates since the 2016 trough needs to be kept in perspective.
Speaking at the Baltic Exchange Freight and Commodity Forum on Wednesday, Van Niekerk noted help on the supply side may come from scrapping linked to new legislation, while it could also be “an opportune time” for the 53 remaining converted VLOCs to head for demolition.
However, given the dry cargo fleet has yet to speed up in response to the improved market, an additional 10% to 14% of fresh capacity could be added by the unwinding of slow steaming, she told the London International Shipping Week event.
On the newbuilding front, Van Niekerk says there have been 195 new bulkers placed this year, up from the record low of 56 in 2016.
However, despite excitement around coal fueling fresh kamsarmax contracts, the orderbook as a percentage of the trading bulker fleet is at the lowest since 2003, she says.
For 2018 Van Niekerk expects dry cargo demand growth of 4% when ton-miles are factored in, ahead of the projected 3.4% fleet expansion.
“By those two numbers the market should start to improve,” she told the audience.
‘The question is just, in terms of those efficiencies, in terms of the slow steaming, will that limit the recovery? Will it take longer?
"And at what stage will people come back to the market and over-order again?
