Ship Owners: Worst is Over for Dry Bulk

The Baltic Dry Index, which has been on a steady decline for the past week, fell 32 points on Friday to close out the week at 1090.

Dry bulk shipping company representatives at the Nordea Markets shipping seminar in London last week, suggested that, while recovery is still shakey, the worst has passed for the dry bulk shipping sector.

"Nobody is saying we are going to have a fantastic booming market, but we are past the worst and we are into a more fundamentally balanced situation," Mats Berglund, CEO of Pacific Basin Shipping Limited (Pacific Basin) was quoted by Reuters as saying at the seminar.

Ioannis Zafirakis, CEO of Diana Shipping Inc. (Diana Shipping), suggested that the market will require another eight months to a year of higher rates before it can be determined if there will be a "real change" in charter rates.

"We are finally starting to see the light at the end of the tunnel. We have been talking about it for years. We are now getting to a point of probably more normalised demand growth," said John Wobensmith, president of Genco Shipping & Trading Limited (Genco Shipping).

However, Wobensmith noted that recovery will not follow "a straight line" - a sentiment echoed by recent movements of the Baltic Dry Index (BDI), which has been on a steady decline for the past week, falling 32 points on Friday to close out the week at 1090.

Having reached 1257 on November 18 - the highest the index has been since November 2014 - the BDI has been heading downward ever since, broken only by a few variable and inconsistent jumps.

Average TC spot rates on Friday saw earnings in the Capesize segment fall to earnings of $9,342 per day (-$1,012) and earnings in the Panamax segment decline to $12,023 per day (-$312), while earnings in the Supramax segment edged up to $10,099 per day (+$87).

Still, the outlook remains positive, and as Ship & Bunker reported last month, Drewry Shipping Consultants Limited (Drewry) says that over the next five years, it expects Capesize one-year time charter rates to double from current 2016 lows.