Dry Bulk Market Still in Limbo as Owners Resist Ordering New Ships

Image Courtesy: Diana

With 12 weeks of 2016 now over, the dry bulk market is still looking bleak, BIMCO says, seeing that the current low demand for transportation of commodities continues.

The market is doing what it can by scrapping old ships and restraining from ordering new ones despite 12-year low newbuilding prices offered from the shipyards, as only four newbuilding orders were registered in the first 12 weeks of 2016.

New contracts for dry bulk ships have been on a path of decline in the last year and a half, currently culminating at a level that resembles a standstill. The four orders amounting to 267,000 DWT is less than a tenth of the 2.8 million DWT placed by the end of February last year.

The fact that shipowners have restrained from renewing or adding to their current fleet, is good for the immensely challenged dry bulk market as an increase in new orders would only worsen the oversupply of capacity in the market, further down the road, BIMCO says.

The low level of new orders is a much needed development in the market. With little to no influence over demand side developments, reducing supply is the only tool owners and operators on the dry bulk market can use to improve on the market situation. The best way to do that is to limit the amount of new orders and increase scrapping,” notes BIMCO’s Chief Shipping Analyst, Peter Sand.

In addition to the low level of newbuilding orders, demolition has gotten off to a good start in 2016. 144 dry bulk ships have been scrapped so far this year, equivalent to 11.9 DWT. In January and February alone, 111 dry bulk ships were scrapped, equalling 9.3 million DWT. This represents a 42 per cent rise compared to the 6.6 million DWT scrapped in the two first months of 2015.

In 2015, 30 million DWT was scrapped as a record high level was reached in the first half of the year.

Despite the low ordering activity, there is still a large order book for future deliveries. This is evident by the fact that 13.2 million DWT of new tonnage was delivered in the first two months of 2016 a slight increase compared to last year’s 11.6 million DWT.

The increased demolition is taking place despite the fact that the scrap steel prices offered to owners wishing to sell their ship for demolition is run down by a low demand for scrap steel,” Sand adds.

The fact that so much has been scrapped in the first two months alone supports our prediction that 2016 will be the busiest year for breaking of dry ships ever.”

Share this article

Follow World Maritime News

In Depth>

Events>

<< Mar 2017 >>
MTWTFSS
27 28 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31 1 2

INMEX Vietnam 2017

The event is an exceptional meeting point for the global maritime community in Vietnam, a region where the industry remains buoyant and strong…

read more >

14th Annual Green Ship Technology

4 concurrent streams focussing on innovation in ship design, energy management, emissions reduction & discharges to sea
Cargo owners’ response to increased pressure for a sustainable logistics chain…

read more >

14th International Maritime Exhibition & Conference

14th EXPOSHIPPING EXPOMARITT Istanbul International Maritime Exhibition will be organized with the support of Turkish Ministry of Economy…

read more >

Ferries Asia Summit

Propelling Regional Waterway Connectivity & Fleet-wide Operational Excellence

Ferry travel is in the limelight. The potential for driving tourism growth is immense – and for archipelago nations battling with urban congestion, ferry services pose a clean, efficient alternative in everyday public transport. But high-profile ferry accidents have brought ever greater attention to safety regulations for Asia’s maritime travel industry.

Amid these circumstances, how can vessel operators cope with ever-tightening safety requirements, while making the right decisions at the right time to capture rising demand? What are the smartest ways to improve service reliability and fleet quality, that maximize operating and capital spend? What are the industry’s best-practices for sustainable growth, and how can they be achieved?

Play your part! Join us at the Ferries Asia Summit 2017 to push forward the regional debate on making Asia’s ferry industry more progressive, safe, and commercially sustainable. Bringing together fast-ferry, RO-RO and ROPAX vessel owners along with international and domestic maritime regulators, classification agencies, shipbuilders and naval architects, this event connects the entire value chain for a meaningful holistic debate on ferry operations excellence in Asia.

WHAT’S ON THE AGENDA THIS YEAR?

Comprehensive debates on addressing the complexity of ferry safety in Asia: Is vessel age truly the greatest concern? How significant are other factors, and how can they be addressed?

Pathways to change through greater public-private collaboration

Contrasting viewpoints on the most effective ways to enhance operational stability & passenger management

Cost-efficient O&M strategies to extend vessel life & tips for stakeholder management to avoid purchasing mistakes

Integrating ferry business with tourism opportunities through strategic partnerships

Exciting formats including speed networking, panel discussions & a high-intensity fast-pitch ‘Shark Tank’!

For more information, click here to download the brochure.
If you would like to attend the event, register here before 3rd February to save USD 400.
Alternatively, email us at enquiry@iqpc.com.sg 
for any enquiries regarding the event.

More info

read more >