Bunker Price Increases to Add to Dry Bulk Stress, Says Singapore Shipping Exec

Friday January 6, 2017

Eddie Huang, managing director of Glory - Pacific Shipping (S) Pte. Ltd. (Glory Pacific Shipping) says increasing bunker prices in 2017 will put more pressure on already challenged dry bulk vessel operators, TradeWinds reports.

"Current prices or moderate increases can be reasonably anticipated to last through 2017. This may give the oil and gas sector a much needed break, but just a little one," Huang told TradeWinds.

While a number of dry bulk players have expressed optimism that the dry bulk market is now on the road to recovery from record lows, shipowners also caution that 2017's outlook is unpredictable, requiring the shipping industry show commitment to tonnage demolition and refraining from placing newbuild orders.

China's economy, oil prices, politics, and new regulations are noted to play the biggest role in determining the future of dry bulk players.

"Final market outcome is very much down to Beijing and coal imports to China, and the end result for 2017 is, therefore, uncertain but should be slightly higher," said Jens Ismar, CEO at Western Bulk Chartering AS (Western Bulk).

"The best case is the recovery will be slow as the tonnage overhang is still there and scrapping has come to a halt."

The Ismar and Huang's comments come as the Baltic Dry Index (BDI) continues its up and down ride, gaining 14 points Thursday to reach 983, edging closer to breaking the 1000 mark for the second time since November.

In terms of average spot TC rates, Capesize earnings grew to $13,176 per day Thursday (+$766), Panamax earnings increased to $6,692 per day (+$233), while Supramax earnings declined to $8,310 per day (-$262).

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