Asia/Pacific News
Waning Demand from China May Send Dry Bulk Crashing
Dry bulk rates are expected to plummet even further in light of declining exports from China, ShippingWatch reports.
China's trade numbers for April were reportedly worse-than-expected, with exports falling 6.4 percent during the month compared to an expected 2.4 percent growth.
Imports also fell 16.2 percent.
"China will not be an economy that depends on exports going forward," said senior analyst Amy Zhuang of Nordea Markets.
"This is a strategy that China has adopted and chosen back in 2009-2010, and this trend is becoming stronger and we're now noting the real effects."
The industry will also be unable to rely on other countries to pick up the slack, according to Yuan, as growing demand in the U.S. has been neutralized by tepid demand in Europe and Japan.
According to Jens Ismar, CEO of Norwegian carrier Western Bulk, the onus is now on shippers to solve the overtonnaging problem.
"During the financial crisis in 2008 the market was saved by a strong demand, especially from China," he said.
"That's not going to happen now, and the gap between supply and demand will need to be closed by reducing the supply through scrapped vessels, cancellations or postponing newbuildings."
Last week, Goldman Sachs also predicted that the sector would suffer from low freight rates until at least 2020.
