World News
Morgan Stanley Warns of a "Losing Battle" for Some Dry Bulk Owners as it Slashes Spot Rate Predictions
Morgan Stanley has downgraded multiple public dry bulk owners this week, saying some owners face a "losing battle" as the sector is now expected to remain under pressure through 2017, IHS reports.
The firm has cut its Safe Bulkers rating from 'Over-weight' to 'Equal-weight' and its Genco, Golden Ocean, and Star Bulk ratings from 'Equal-weight' to 'Under-weight'.
The downgrades followed Morgan Stanley drastically revising spot rate predictions, including a 23 percent reduction of Capesize rates to $9,000 per day compared to the investment bank's previous forecast.
In 2017 it now predicts that rate will climb to $11,800 per day, which is a 22 percent reduction compared to Morgan Stanley's previous forecast.
Morgan Stanley says Panamax rates will decline to $6,000 per day next year, or 24 percent less than the previous forecast, and to $7,900 per day in 2017, a 21 percent decline compared to previous expectations.
As for the Baltic Dry Index, which Morgan Stanley had thought would rise from a 751 to a 983 average in 2016, the new estimate is 721 for 2015 and a further drop to 714 in 2016.
Overall, Morgan Stanley expects the supply/demand balance to improve after next year, and while it anticipates net fleet growth of 2.7 percent versus demand growth of 2.3 percent in 2016, net fleet/demand growths of 1.2 percent and 4 percent respectively are expected in 2017.
Fotis Giannakoulis, a Morgan Stanley analyst, said, "We expect the market to remain under pressure at least through 2017 as most of the large orderbook is delivered while seaborne demand is seeing only modest growth."
"With few signs of relief next year, companies are focused on managing liquidity. For some owners, this may be a losing battle."
Morgan Stanley's gloomy prognostications match those of JPMorgan Chase & Co., which in an October report said of the dry bulk market, "We expect that 2016 could become an even worse year than the historically low 2015."
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
Popular Now More
-
Jun 05Marex's Bastien Declercq discusses how biofuel markets are likely to react to the IMO's new GHG regulation. -
Jun 04The MPA has not directly given a reason for declining to renew the licence. -
Jun 02The new joint venture will initially focus on biofuel supply in northern Europe, BlackCoral Energy Managing Partner Jesper Christensen tells Ship & Bunker.