There is worse to come

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Next year will be a tougher year than 2009 with any ship owner bankruptcies likely to happen towards the end of the recession rather than at the beginning if the supply problems kick in, according to Paragon Shipping boss Michael Bodouroglou.

Talking to Ship Management International, Mr Bodouroglou said he was very confident about the health of the market fundamentals when it came to vessel demand but stressed that the size of the orderbook was serious and if the orders do materialise “no matter how strong demand is, then the sector will be in crisis”.

He added: “The future of dry bulk shipping will be determined by the number and the timing of the newbuildings. Scrapping is not enough. The primary reason for the market spike we have seen is that we have not had a lot of new vessels delievered yet but we have had the scrapping. The net result on the fleet size in Q1 has been nil. If supply had increased by 10% as the orderbook had suggested, we would not have had the spike.

“I hope a lot of the orders will be cancelled. There will be cancellations, but how many is difficult to tell. A lot of things will also depend on political decisions by China; will they subsidise the shipyards, or will they have the ships delivered then hand them over to publicly owned companies,” he stressed.

“We have to expect the unexpected. I think 2010 will be a tough year and tougher than 2009, but at the same time if the supply factor kicks in which I believe it may, we will see bankruptcies closer to the end of the cycle.”

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