Disastrous Dry Bulk Market is "Overwhelmed" Says Georgiopoulos, as Baltic Dry Index Slumps to All Time Low

The BDI today faces the prospect of seeing a decline every day over the last four weeks.

The Baltic Dry Index (BDI) Thursday fell to an all time low of 504, with limp Chinese demand for iron ore and coal, along with a glut of vessels, the ever-present factors in what appears to be a worsening of already chronically woeful conditions for the sector.

September's glimmer of optimism from Deutsche Bank for a November recovery has been firmly trounced, and the BDI today faces the prospect of seeing a decline every day over the last four weeks.

"What's happening is that in 2012 to 2014 the number of ships ordered overwhelmed the market," ship-owner and bunker player Peter Georgiopoulos was quoted as saying.

"The fleet is four times the size that it should be."

The arrest of Georgiopoulos' Capesize Sparta in Singapore last week also illustrates the magnitude of change in fortunes for the sector.

The arrest stemmed from a Deutsche Bank claim of $81.2 million against the vessel.

VesselValue.com, who says the vessel while still under construction in 2008 was worth as much as $176.44 million, was valued at around a third of that when it hit the water in 2010, and today is worth $24.12 million.

Such a dramatic decline in asset value will also be weighing on the minds of bunker suppliers' credit managers, although Ship & Bunker understands that the current climate of low bunker prices and an excess of product has somewhat loosened the credit picture over the last several months.

Meanwhile, Eirik Haavaldsen, a shipping analyst at Oslo-based Pareto Securities AS, highlighted to Bloomberg the seemingly fatal impact of Chinese demand.

"The main issue is the lack of demand for iron ore from China," he said.

"This market is looking like a disaster and the rates are a reflection of that. It is looking scary for the market and it doesn't look like there is going to be any life in the market in the near term."

Despite the difficulties, some operators appear to be improving their position.

Earlier this week Ship & Bunker reported that Eagle Bulk Shipping Inc. (Eagle) managed to shrink its loss for Q3 2015, with recently appointed CEO Gary Vogel saying they were in the early stages of a "fundamental effort to redefine the company."