Drewry: Dry Bulk Unlikely to Be Profitable Until 2017

by Ship & Bunker News Team
Wednesday May 20, 2015

Ongoing low demand growth in dry bulk means that the market is not expected to return to profitability until 2017, according to research by Drewry. 

Though shippers' earnings are expected to improve in 2016, the gains are not expected to be enough to cause freight rates to reach breakeven levels. 

"We do not expect any noticeable recovery in bulk shipping freight rates this year as the market remains severely over-tonnaged," said Rahul Sharan, lead analyst for dry bulk shipping.

Drewry said that the 2017 prediction also assumes that shipowners will refrain from ordering significantly more ships and that the current rate of scrapping  will continue, with 2015 having reportedly seen a record number of ship scrappings so far.

"Anaemic demand growth is here to stay, especially as the trade development in coal and iron ore into China is expected to decline further," Sharan said.

As China moves towards renewable energy to combat its current air pollution problems, dry bulk is expected to be impacted heavily, according to Drewry, especially as coal and iron ore make up almost two-thirds of the current dry bulk market. 

Earlier this month, it was predicted that waning demand from China may even send dry bulk crashing, with the onus now turning to shippers to solve the overtonnaging problem. 

Ship & Bunker News Team
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