Following limited contracting in the bulk carrier sector in the last three years, ordering has started to pick up with 17.1 million dwt contracted in the first nine months of 2017.
By the end of September 2017, the orderbook totalled 623 vessels of 64 million dwt, equivalent to 7.9% of fleet capacity, close to the historical low of 7.2% recorded in April 2002.
Amidst difficult market conditions and limited access to finance for many owners, contracting in recent years has been very subdued, according to Clarksons Research. Bulk carrier ordering fell from 64 million dwt in 2014 to 24 million dwt in 2015, and just 14 million dwt in 2016.
As a result of the historically low levels of contracting, the orderbook shrank by 51% between end 2014 and end 2016 in dwt terms, to total 941 vessels of 85 million dwt. This equated to 11% of fleet capacity, the lowest level in almost 15 years.
The recent increase in ordering has brought a volume which is already 22% higher than the full year 2016 level, largely reflecting increased Kamsarmax ordering, even if overall newbuilding interest has remained at subdued levels, Clarksons Research informed.
The continued firm pace of deliveries, with bulk carrier deliveries projected to remain over 40 million dwt in full year 2017, has meant that the orderbook has shrunk by 25% in the year-to-date.
“While a further decline in the orderbook to fleet ratio is possible in the rest of 2017, there is clear potential for the higher contracting levels seen recently to lead to an increase in the ratio next year for the first time since 2013, suggesting that the most likely scenario is that the current orderbook cycle is now in the process of bottoming out,” Clarksons Research said.