The dry bulk market has failed so far to justify the positive sentiment which had prevailed during the final months of 2013, when the Baltic Dry Index was rallying to levels just below 2,000 points. As a result, sceptics have yet again resurfaced, questioning the level of predicted health in the balance between supply and demand, going as far as estimated a new level of tonnage oversupply in the coming years, especially given the fact that demolition activity has retreated once again this year.
According to Intermodal's latest weekly report, with almost half of the year gone by, the dry bulk market continues to exhibit signs of weakness, giving birth to a lot of uncertainty for both existing ship owners and potential investors, regarding what to expect for the second half of the year, not to mention further disbelief to those voices that, inspired by the last quarter of 2013, were calling for a stable market during 2014. Intermodal's SnP broker, Mr. Panos Makrinos noted that "looking back to the beginning of the year we can say that from the month of February until the time of this writing, with the exception of a small rally, the market has struggled for the greater part, with the BDI returning to below 1,000 points. More specifically, in December last year and while the Index stood above 2,000 points, the overall sentiment was calling for an equally strong market in 2014, which never came".
Makrinos added that "the market has in fact followed a persistent downward trend until mid-February when we started seeing the first signs of improvement. The latter lasted for about a month, with the BDI peaking for the year within this period but still remaining below 2,000 points, and soon after that the downward trend resumed, bringing us to today. Seeing the low levels the freight market has been fairing, most would normally expect that secondhand prices would have followed course, but it seems that it took a while before we started seeing the first discounts off last done sales and even the levels at which most vessels come in the market today still don’t reflect the current freight environment. There are in fact cases of modern Handymax to Panamax tonnage where inspection interest remains high allowing owners to hold firm on their asking price, while at the same time there are currently a lot more sales candidates from the Far East" he stated.
On the other hand, there are those who are more conservative and therefore unwilling to accept seller’s ideas. According to Intermodal's broker, "besides the fact that the current price levels make no sense to them, as long as these subdued freight rates persist, they are also very sceptic when it comes to the number of deliveries set to enter service within the next couple of years, predicting that a renewed overcapacity problem will most probably surface possibly creating another market bottom. Should they be proven right, we will certainly witness another round of softening asset values, both in the secondhand and the newbuilding market, especially if scrapping activity remains at the low levels we have been witnessing during the past months and despite those sky high demo prices around".
As such, Makrinos conceded that "it is always both risky and difficult to make predictions and nobody could say with certainty what the next six months of 2014 hold for the market. And despite the fact that things have been far from rosy so far this year, let’s not forget that the first half of 2013 wasn’t a whole lot different with most predicting further price reductions, which nonetheless never materialized. In terms of the overcapacity being created, let’s hope that the upcoming lower emissions rules, the Dry Docking for most of the 80’s built ships that will be due soon, as well as scrap subsidies similar to the ones offered in China, could well be some of the reasons that will restrict overcapacity. Will they nonetheless be enough to protect the market from the number of vessels soon to be delivered? It’s anyone’s guess at this point", he concluded. Nikos Roussanoglou, Hellenic Shipping News Worldwide
Dry bulk market still deemed a "minefield" for many ship owners
- Details
- Category: Mercados - Fletes- Cotizaciones
- Published on Thursday, 15 May 2014 05:40
- Hits: 2053
Thursday, 15 May 2014 | 00:00
