Drewry Maritime Research’s latest edition of its Dry Bulk Forecaster has pulled no punches in its assessment of a market that looks certain to continue hitting dry bulk ship owners hard.
Tonnage supply hit a massive 605 million dwt at the end of 2011, an increase of 15.2%, which is impressive considering 19m dwt was removed in the same period. With rates suffering under current market conditions, Drewry’s forecast for the fleet hitting 684m dwt by the end of 2012 and 765m dwt by the end of 2016 signals daunting prospects for the future.
The near future will play heavily on supply-side fundamentals, as ships continue to hit the water at a very fast pace. Given the colossal delivery schedule and slippage from previous years, deliveries in 2012 are forecast to increase further to 97.6m dwt. The largest increase in deliveries is foreseen in the VLOC segment, where a total of 16.5m dwt of tonnage will hit the water compared with only 8.9m dwt in 2011. In light of China’s recent ban on such vessels, this could mean further headaches for owners.
Demolition in this over-supplied market totalled 19.1m dwt in 2011, nearly quadruple that of the preceding year, as the ailing hire market forced owners to retire older ships. 2012 levels are forecast to reach almost the same as 2011 due to the declining average demolition age of vessels. However the Capesize segment is set to see a decline in demolition levels as most of the obsolete vessels were already demolished in 2011. In the longer forecast period all demolitions are expected to decline, to total 10.6m dwt in 2016.
Shalini Shekhawat, a dry bulk analyst at Drewry said: “It’s not all bad news for the sector as Drewry forecasts a 4% growth in trade for 2012, increasing yearly to a rate of 5.8% come 2016, which considering growth stood at less than 1% in 2011 is a boost for the market . Coupled with an orderbook that has been shrinking since February 2009, when it sat at 295m dwt, there are glimmers of hope that the serious issue of over supply can start to be addressed.”