The struggles of dry bulk shipping companies to recover their costs are to resume for at least the following years as the gloomy outlook for the dry bulk shipping market continues.
Ship owners’ efforts to recover their costs by downsizing their vessel holdings is expected to enable oversupply to reduce over the next five years allowing for the market to return to profitability from 2017, according to Drewry’s Dry Bulk Forecaster.
The second-hand market remains active, as owners with sound financial backing have acquired many vessels in distress sales. The global dry bulk fleet grew just 2% in the first nine months of 2015, reaching 773 million dwt.
On the demand side, Drewry forecasts that the iron ore trade will grow at a moderate pace of 3-4% over the next few years, coal imports to China have slowed down and a rebound is not expected any time soon. Although India does have an over-ambitious plan to become self-reliant in thermal coal, the country cannot simply lessen its dependence on imported coal, as demand continues to rise steeply.
“Dry bulk freight rates are expected to improve from the fourth quarter onwards. Drewry’s view of a more stable supply-demand balance hinges largely on the expected improvement in the demand outlook and an anticipated moderate growth in the supply perspective. However, a recovery to the point that shipowners start earning profits will remain elusive for at least another year,” said Rahul Sharan, Drewry’s lead analyst for dry bulk .