Lower Newbuilding Prices Failing To Entice Dry Bulk Buyers: BIMCO

Japan has been one of the only sites of significant dry bulk newbuilds during the latter half of 2015.

BIMCO Friday said that newbulding activity in the dry bulk market remains extremely subdued, despite prices for new ships hitting their lowest level in over a decade - a situation it describes as "positive" for the ailing sector.

Newbuilds at the shipyards of the so-called "big 3" (China, South Korea, and Japan) have totaled just 11.3 million deadweight tonnage (DWT) so far in 2015 compared with 58 million DWT during 2014, BIMCO said.

Chinese shipyards have seen the most significant drop, having contracted just 2.5 million DWT in 2015, down from 34 million DWT during 2014, the firm noted.

The lack of building activity comes as newbuild prices were said to have fallen past the lows of 2012 and are now at their lowest level since 2003.

BIMCO said only one notable order has been placed in recent months, from Nippon Steel & Sumitomo Metal Corp. for nine Very Large Ore Carrier (VLOC) vessels from two yards in Japan.

"However, for there to be an actual shorter-term improvement in the market we would need to see a spike in demand or a substantial reduction of the fleet," said Chief Shipping Analyst Peter Sand.

It was also noted that ship owners have also been slow in scrapping vessels during the second half of the year, after setting a new half-year record during the first six months of 2015 - a situation Sand predicted back in July. 

Nevertheless, there is still a "great imbalance between supply and demand" in the dry bulk market, BIMCO says.

In August, Ship & Bunker reported that lower bunker prices may be impacting the dry bulk market by encouraging shippers to abandon slow steaming practices.