Basic HTML Version
Market Analysis
May 2013
Dry Bulk
38
Although 2013 is expected to fare bet-
ter than 2012, in terms of dry bulk freight
rates, it will still take the market a while,
before it gains some solid ground under
its feet, said BIMCO’s Chief Shipping
Analyst, Peter Sand, in an exclusive
interview with Hellenic Shipping News
Worldwide.
He cited the heavy overhang of ton-
nage as the main reason for this, despite
the fact that as BIMCO recently fore-
casted, a total of 30 million dwt is
expected to leave the dry bulk fleet
during 2013, versus 33.7 million dwt
which was scrapped last year. So far in
the year, a total of 8.7 million dwt has
been recycled.
According to Sand, ship owners will
still have to resort to any kind of mea-
sures they can apply, in order to affect
the supply side of the equation.
That is, “keep slow steaming around
also when rates start to pick up, ax com-
mercially unviable tonnage as soon as
possible and seek to expand capacity in
second hand market if possible to avoid
more new tonnage coming into the mar-
ket”, Sand noted.
Here are the
questions
and Sand’s
answers:
When do you expect to see an easing
of the pressures caused to the freight
markets, especially in the dry bulk
segment, from the current imbal-
ance of the supply/demand scale?
The “million dollar” questions for start-
ers… In our annual BIMCO Reflection,
which is published at the start of the year
we said that 2013 will be the turning
point on the macroeconomic scene.
This is still the case, despite the recent
downward adjustment from the IMF.
Overall this means that the shipping
market will not get firm ground under its
feet as soon as previously forecasted this
spill into the dry bulk shipping market
as well.
We still believe 2013 will turn out to
be a better year than 2012 overall, but
for a significant improvement of the
fundamental balance between supply and
demand we have to wait as the overhang
of tonnage is still heavy.
Do you believe that 2013 will prove
more positive for shipping compa-
nies’ earnings?
Operating earnings at EBITDA-level
should improve as rates are seen up from
2012. As for the bottom line the depre-
ciations and financing costs could still
become higher for many owners weight-
ing down on the final line.
OPEX is seen to increase a bit – leav-
ing bunker prices as the dark horse in the
equation.
Recent drop in bunker fuel cost to the
extent of USD 70-80 per mt is certainly
a move in the right direction.
Do you share the view of most ana-
lysts, that 2014 will mark the end of
the present downward cycle of the
dry bulk shipping markets?
I think it’s fair to say that we are
beginning to see the end of the present
downward cycle.
BIMCO base that upon the fact that
the supply growth is coming down from
the very high numbers in recent years
– whereas the demand situation is main-
tained at a solid level.
I don’t spend much time on setting
an exact date for the end of current dol-
drums.
Dry bulk market rebound
may take longer than
expected