Grindrod Shipping chief executive Martyn Wade is bullish on the future of the bulker market, despite any possible pandemic-related disruption in China.
He said his New York-listed company has heard reports that river pilots on the Yangtze River may have to quarantine amid spiking virus cases in China, the coast of which welcomes 22% of the global dry bulk fleet.
"Most certainly it’s interesting what’s going on in China actually from a Covid perspective at the moment," he said during a call with analysts.
"It is staggering how much congestion, with another figure that 7% of the world’s hands are basically tied up in congestion in China. That’s all very positive."
Wade acknowledged that China might slow down steel production in efforts to curb emissions and contain the virus, but he noted that the country's output is at record levels.
"So demand is there," he said.
"So, when we actually looked at all the Q2 commodity figures, what was very pleasing was that well, it has rebounded."
Futures be damned
He also pointed out that the forward freight agreement rate for supramaxes has fallen to around $24,000 per day for 2022's first quarter from about $33,000 per day for the last three months of 2021.
"Traditionally, it comes off," he said.
"But as I think as we found this year, can we realistically expect China to allow 100m people to go home?
"So our feeling is it might be a little stronger, but we’re kind of taking quarter-by-quarter and demand is there and there’s nothing in the figures at the moment that suggests anything that’s going to end anytime soon.
Beyond that, the orderbook is at its lowest level in many years, he said.
"That’s always positive," he said.
"If the orderbook has only started picking up, then we always know what happens next, but that could be years away now. So all in all, I think it’s quite optimistic."
Grindrod owns 15 handysize bulkers and eight supramaxes. It also charters in another eight supramaxes.
